MNI POLICY: G7 Pledges Cooperation, Offering Few Specifics

By Evan Ryser

     WASHINGTON (MNI) - Finance ministers and central bank governors from the

Group of Seven nations said Tuesday they are monitoring the spread of the

coronavirus and stand ready to cooperate further to safeguard the global

economy, passing on a chance for action now that some investors were seeking. 

     "Given the potential impacts of COVID-19 on global growth, we reaffirm our

commitment to use all appropriate policy tools to achieve strong, sustainable

growth and safeguard against downside risks," the group said following a special

morning conference call. 

     The statement stopped short of stating specific actions countries might

take in response to the virus. U.S. Treasury Secretary Steven Mnuchin and

Federal Reserve Chair Jerome Powell led the call which included officials from

Canada, the U.K., France, Germany, Italy, and Japan. 

     "G7 central banks will continue to fulfill their mandates, thus supporting

price stability and economic growth while maintaining the resilience of the

financial system," the statement said. "G7 Finance Ministers and Central Bank

Governors stand ready to cooperate further on timely and effective measures."

     The OECD on Monday, calling on governments to act "swiftly and forcefully,"

lowered its central growth forecast from 2.9% to 2.4% but said a "longer-lasting

and more intensive coronavirus outbreak" could slash growth to 1.5% in 2020.

     The Reserve Bank of Australia on Tuesday cut its key rate by 25 bps to

0.5%, promising to ease further to support growth if needed. The Bank also

pointed to indications of help from the Australian government for the areas of

the economy hardest hit by the virus outbreak. 

     The Bank of Canada is also expected to cut the G7's highest interest rate

of 1.75% on Wednesday due to coronavirus damage to the global economy that

threatens a domestic slowdown.

     The International Monetary Fund and World Bank Group issued a joint

statement Monday, saying they will "use our available instruments to the fullest

extent possible, including emergency financing, policy advice, and technical

assistance."

     That followed statements from Powell, BOJ Governor Haruhiko Kuroda, ECB

President Christine Lagarde and the Bank of England. While the BOJ offered to

supply ample liquidity and stabilize the financial markets, the Fed, ECB and BOE

offered to act as needed, offering confidence that helped steady global

financial markets Monday. 

--MNI Washington Bureau; +1 202 371 2121; email: evan.ryser@marketnews.com

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