Economic Affairs: Why the Covid-19 financial crisis will get worse

A war on the disease is also a war on the economy

New: Gift this subscriber-only story to your friends and family

Economic policy bazookas are going off everywhere. On Sunday, the US Federal Reserve went full tilt, slashing the Fed funds rate by 1 percentage point to near zero, having already cut half a percentage point on March 3, plus taken steps to expand its balance sheet by buying bonds, as well as extending short-term credit to banks.

In an emergency meeting on Monday, the Bank of Japan decided to double the amount of money it pours in the Tokyo stock market. In Europe, the German government abandoned its longstanding balanced budget mindset, pledging unlimited cash to businesses hit by the coronavirus. China injected an additional US$78 billion (S$110 billion) into its banking system. Several other countries cut rates. The leaders of the Group of Seven industrial countries vowed to do "whatever is necessary" to hold up the global economy.

Already a subscriber? 

Read the full story and more at $9.90/month

Get exclusive reports and insights with more than 500 subscriber-only articles every month

Unlock these benefits

  • All subscriber-only content on ST app and

  • Easy access any time via ST app on 1 mobile device

  • E-paper with 2-week archive so you won't miss out on content that matters to you

Join ST's Telegram channel and get the latest breaking news delivered to you.

A version of this article appeared in the print edition of The Straits Times on March 18, 2020, with the headline Why the Covid-19 financial crisis will get worse. Subscribe