The Federal Reserve and European Central Bank Actions

The Federal Reserve led the global monetary policy response to the pandemic of the coronavirus.

The United States dollar was softer against a basket of currencies shortly before noon. It was lowest in a week and fell 0.5% to 99.970. Moreover, against the yen, it was also down by a similar amount at 106.705 yen per dollar.

Oil steadied somewhat following its latest plunge. Thus, after dropping 5%, Brent crude turned positive. Moreover, the euro gained 0.5% to $1.08805. Markets look for any forward guidance from the Federal Reserve. On Tuesday, the Federal Reserve met and will issue statements due on Wednesday. Moreover, the European Central Bank will meet on Thursday.

The Federal Reserve led the global monetary policy response to the pandemic of the coronavirus. They cut rates of interest to zero. Moreover, they are aggressively buying corporate credits and bonds. Overnight, that program extended to include municipal debt of smaller United States cities.

The Federal Reserve

Still, the Federal Reserve is beginning its two-day meeting with no control over price stability or employment. There is little ability even for judging where an economy battered by the coronavirus is headed.

Analysts say that it is unlikely that central banks or Federal Reserve will make further significant moves of policy, given the depth and scope of recent action.

Thu Lan Nguyen is an analyst at Commerzbank. She said that all of them have beefed up asset purchases as much as they could. Moreover, she continued, all of them are near the minimum lower bound of the interest rate.

Most likely, they will remain for the foreseeable future. It will point towards relatively stable rates of exchange.

The European Central Bank has had less room to maneuver on rates. Thus, it announced a program of an enormous bond-buying. Still, indecision and bickering over a eurozone rescue package have someplace in the market expecting more profound action. Perhaps it will happen Saturday.