Central banks keep reloading their weapons to lessen market fears caused by the global coronavirus pneumonia pandemic, while analysts call for more joint action to constrain the epidemic and prevent a severe economic downturn.
The People's Bank of China, the central bank, refrained from cutting the benchmark interest rates on Monday, but injected new liquidity of 100 billion yuan ($14.3 billion) into the financial system through the one-year, medium-term lending facility, keeping the rate unchanged at 3.15 percent.
It followed with another 550 billion yuan on the same day, through cutting the amount of cash some commercial banks must hold in reserve, the reserve requirement ratio.
The central bank still has policy space to lower the lending rate, possibly through cutting the one-year loan prime rate to 4 percent as early as Friday to shore up economic growth, according to Wen Bin, chief economist at China Minsheng Bank.
"The window for additional interest rate cuts will remain open in the first half of April, when consumer inflation pressure may be slightly eased," he said.
Policies already rolled out by the central government, including interest rate cuts, reductions in the reserve requirement ratio, support for easier lending conditions for businesses, tax relief measures and infrastructure investment, are expected to help support the economic recovery, Luis Kuijs, head of Asia Economics for Oxford Economics, said on Monday.
While China still holds conventional monetary policy tools, some major central banks have rushed into anticrisis mode by immediately expending their full range of tools to head off the downturn risks.
The US Federal Reserve slashed the policy rates by a full percentage point to a range of 0.0 to 0.25 percent on Sunday, hours before international financial markets opened for the new trading week, to curb investors' panic after abrupt declines in stock prices last week. It also promised to boost its bond holdings by at least $700 billion to maintain financial stability.
The Fed's emergency rate cut, before its scheduled meeting on Wednesday, came just 12 days after another cut of 0.5 percentage point. The Fed rate was lowered to zero, matching its record low level during the 2008 financial crisis and where it was held until December 2015.
"The US Fed has done so by firing all of its guns, grenades as well as bazookas, at the problem," said Jameel Ahmad, global head of Currency Strategy and Market Research at FXTM, a global foreign exchange trading platform. "It can't be helped to be concerned following this emergency move from the Fed, to question what ammunition does the Fed have left to solve what will be a prolonged problem."
Although countries are refreshing their measures to contain the effects of the virus, the global market is being pushed deeper into turmoil by unprecedented simultaneous demand and supply shocks.
"Governments around the world have come to terms with the harsh reality of COVID-19, and have followed China's measures to fight the virus spread. But the more effective the quarantine efforts are, the more costly it will be economically," said Hong Hao, managing director and head of research at BOCOM International Holdings Co, a Chinese financial services company.
"In the near term, governments' resolve and monetary easing in an extremely panicked market will induce a technical rebound. But the longer-term economic outlook is turning increasingly clouded," Hong said.