The U.S. Federal Reserve began the week early, launching a series of stimulus measures on Sunday evening, and it wasn’t alone as counterparts across the Asia-Pacific region joined in.
Below is a rundown of what monetary policy makers did or said over the past 24 hours.
The central bank also announced several other actions, including letting banks borrow from the discount window for as long as 90 days and reducing reserve requirement ratios to zero%. In addition, it united with the central banks of Japan, the U.K., euro-area, Canada and Switzerland to ensure dollars are available around the world via swap lines.
People’s Bank of China
Focused more on liquidity, Chinese policy makers injected 100 billion yuan via the one-year medium-term lending facility Monday, keeping the rate unchanged at 3.15%. The central bankers acted alongside reports Monday morning that economic activity was slammed more than expected in the first two months of the year.
Bank of Japan
It doubled its target for net purchases of exchange-traded funds to 12 trillion yen while holding its key interest rate steady as it gathered Monday instead of Thursday as scheduled. The central bank also introduced a new lending program to help businesses hit by the pandemic. Governor Haruhiko Kuroda said the central bank would conduct more policy easing as needed, with further bond-buying as well as interest-rate cuts on the table.
The Central Bank of Sri Lanka cut its standing lending facility rate by 25 basis points to 7.25% in an unscheduled decision on Monday. It said there was an urgent need to support the economy.
Sri Lanka Cuts Interest Rate to Shield Growth as Virus Spreads
The central bank said it’s lowering remuneration rates applied to required reserves in liras. Starting from March 20, the remuneration will be cut to 8% from 10% for banks whose real loan growth complies with the regulatory changes unveiled in August. The rate will be zero for those whose real credit doesn’t expand in line with the previously announced measures on required reserves.
Reserve Bank of New Zealand
New Zealand issued an early-Monday emergency rate cut of 75 basis points to 0.25%, and promised to keep the new rate for at least a year. Should further stimulus be required, the RBNZ said it would turn to quantitative easing for the first time in New Zealand history by undertaking large-scale purchases of government bonds.
Bank of Korea
It cut its key interest rate by 50 basis points, to 0.75%, in another emergency meeting on Monday. The BOK board is slated to convene April 9 for a regular meeting. Some economists see that as another occasion for a rate cut.
Reserve Bank of Australia
Australia will offer more and longer repurchase operations to ensure smooth functioning of credit markets after it injected a record A$8.8 billion ($5.4 billion) of liquidity Friday in its regular open market operations. It promised more short-term repurchase operations to support financial markets and small businesses. It also said it “stands ready”to purchase government bonds and will announce its plans on Thursday.
Philippine central bank Governor Benjamin Diokno, who is due to announce a rate decision on Thursday, signaled he could cut by more than 25 basis points.
- Philippine Rate Cut May Be More Than 25 Bps: Diokno on ANC
Bank of England
In his first day in office, Bank of England Governor Andrew Bailey promised to deliver “prompt action again” whenever needed to stem the economic fallout from the coronavirus pandemic. The BOE last week reduced rates by 50 basis points in an emergency cut.
The Bank of Israel on Sunday said it’d be purchasing government bonds for the first time since 2009 to smooth volatility and boost liquidity, its latest emergency step in the face of the coronavirus outbreak. On Monday, the bank introduced dollar-shekel swaps with one-week maturities, a new tool to supply dollar liquidity to local lenders.
- Bank of Israel Boosts Dollar Liquidity With New Swap Offerings
India’s central bank took a number of liquidity measures Monday and didn’t rule out an interest rate cut at its April meeting. The measures include a new round of dollar-rupee swap contracts and boosting cash injections through 1 trillion rupees ($13.5 billion) of long-term repo operations, Governor Shaktikanta Das told reporters in Mumbai.
- India’s Central Bank to Boost Liquidity to Counter Virus Risks
Central banks in Kuwait and the United Arab Emirates followed the Fed in cutting interest rates, and other Gulf countries are likely to follow. Many of them have currencies pegged to the dollar, and tend to follow moves in the U.S. in lockstep.
Hong Kong Monetary Authority
It followed the Fed as usual and reduced its benchmark rate by 64 basis points to 0.86% hours after the Fed. It was the second rate reduction this month. It also reduced capital buffers.
— By Simon Kennedy (Bloomberg)