IMF to make $50 billion in emergency funding available
The International Monetary Fund has announced that it’s to make $50bn in emergency financing available for low income and emerging market countries to counter the impact of the corona virus outbreak.
Its Managing Director, Kristalina Georgieva, said the outbreak is a ‘global problem calling for a global response.’
The IMF expects the global supply of goods to be disrupted and the demand for goods to fall. It believes these impacts will spill across borders.
It believes global growth this year will drop below last year’s level.
Earlier, the European Central Bank’s rate-setting Governing Council held a telephone conference call last night to assess the impact of the coronavirus outbreak but policy action was not on the agenda, two sources told Reuters.
The meeting was held after the Federal Reserve’s surprise rate cut.
The meeting discussed operational and business continuity issues and there was no debate on whether the ECB should enact policy measures, like its US counterpart, the sources said.
The bank’s next scheduled meeting is on March 12.
The sources said the discussion centred on how the financial system was coping with the outbreak and how the euro zone’s 19 central banks would cooperate in case of stress.
Although there are no signs of liquidity problems or increased use of cash, policymakers discussed how the ECB and the national central bank would identify and respond to such signs of stress, the sources added.
ECB President Christine Lagarde said earlier this week that the bank would be ready to take “targeted” measures if needed.
Sources close to the discussion said that the main focus of such measures would be providing financing and liquidity to small and medium-sized enterprises.
Markets now almost fully price in a 10 basis point cut in the ECB’s minus 0.5% deposit rate next Thursday.
Earlier this week, Australia’s central bank cut interest rates to a record low and said it was ready to provide further action if needed as policymakers around the world pledge economic support against the impact of the coronavirus.
Separately, the ECB called off public forums that were to form a key part of its one-year policy review because of concerns about the coronavirus outbreak, it said in a statement today.
“All travel by executive board members and employees judged to be non-essential is restricted until 20 April, 2020, when the situation will be re-assessed,” the ECB said.
“The ECB is also postponing or cancelling conferences hosted at the central bank and its ECB Listens event in Brussels will be held on a new date,” it added.
But the ECB’s March 12 Governing Council meeting and press conference will go ahead as planned.
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