Central Banks May Act In Concert To Fight Coronavirus

After The Global Financial Crisis Of 2008-09, The Spread Of The Deadly Covid 19 Or Coronavirus Could Prompt Central Banks Of Several Countries Across The World To Go For Co-Ordinated Policy Action To Arrest The Impact Of The Disease.

Beside The US Fed Reserve, Which Reduced Interest Rates By 50 Basis Points, Australia And Malaysia Too Lowered Rates On Yesterday.

The Reserve Bank Of India (RBI) Has Said That There Was Enough Room To Further Reduce Interest Rates If The Situation Demanded With The Spread Of The Deadly Disease, Which Has Now Impacted Several Countries Outside China.

The RBI Has Held Several Meetings On The Possible Outcomes Of This Disease And Its Impact On The Economy. RBI Governor Shaktikanta Das, In An Interview To Bloomberg News, Said That The Central Bank Is Closely Monitoring The Situation And Was Ready To Take Necessary Steps To Arrest The Impact Of The Virus On The Economy While Maintaining Financial Stability And Investor Confidence. He Also Said That There Was Need For Co-Ordinated Policy Action. Das Said That He Expected Some Discussion On This Among The Central Banks Of Major Economies Including India.

The Indonesian Government Is Already Working On A Second Stimulus Package While Central Banks In Japan And The U.K Are Already Looking At Ways To Stabilize Markets. Other Central Banks Are Also Expected To Take Necessary Action.

The Rapid Spread Of The Virus Would Significantly Impact Global Growth And Is Likely To Pose Fresh Challenges To India, Which Is Already Battling An Economic Slowdown. India’s Growth Rate In The Current Financial Year Is Expected To Be Between 4.8 And 5 Per Cent.

The Governor Added That The Outlook On Inflation And Interest Rates Will Be Made When The RBI’s Monetary Policy Committee (MPC) Meets Next Month. However, The Central Bank May Even Announce Measures Before The Meeting Depending On The Situation.

The RBI Did Not Reduce The Repo Rate Or The Rate At Which It Lends To The Banks In Previous Two MPC Meetings Due To Inflationary Pressures. For The Month Of January, Retail Inflation—Calculated On The Basis Of Consumer Price Index (CPI), Touched 7.59 Per Cent—The Highest Since May 2014, When It Was 8.33 Per Cent..