Surprising rate cut by the US Central Bank

The US Central Bank cut on Tuesday due to the Coronavirus to a surprise key interest rate. He is now in the range of 1.0 to 1.25 percent, said the Federal Reser

Surprising rate cut by the US Central Bank

The US Central Bank cut on Tuesday due to the Coronavirus to a surprise key interest rate. He is now in the range of 1.0 to 1.25 percent, said the Federal Reserve (Fed). Unexpectedly, violently, the interest rate falls by half a percentage point.

The Central Bank will watch the Situation and their economic consequences more carefully and "their resources in order to respond appropriately, to support the economy". The next regular meeting of the Central Bank, in the amount of the base rate should be decided, should take place only in two weeks.

The Central Bank had already at the end of last week declared that the impact of the epidemic of the new Coronavirus closely follow and, if necessary, to act ready. U.S. President Donald Trump called on the – government – independent Central Bank because of the impact of the Coronavirus repeated interest rate cuts. He is afraid – probably also in terms of the presidential election in November – as a result of the epidemic, a dip in growth.

the impact of The Coronavirus epidemic strain of the development of the global economy. In the United States so far, however, only about 100 infectious, and six deaths reported.

the G7 wants to keep trade

The Fed had lowered its key interest rate last year, three Times by 0.25 percentage points, with the final two sessions, however, in view of the robust economic development and low unemployment in the United States unchanged.

Only a few hours before the statement of the Fed had expressed the leading Western industrial countries (G7) to their will, against the economic consequences of the crisis to proceed. The US Dollar slumped to 0,9530 francs, while the Euro rose to 1,0670 francs.

the spread of The novel Coronavirus and the impact on financial markets and the economy would be closely watched, it said in a statement, the Finance Ministers and Central Bank chiefs of the G7.

"in view of the possible impact of Covid-19 on global growth, we reaffirm our obligation to take all appropriate policy instruments to achieve strong and sustainable growth, and safeguard against downside risks," it said. The Finance Ministers are willing to, also fiscal measures – so, for example, higher government spending – to take, to the extent that this is necessary. To the group of the G7 countries, the USA, Japan, Germany, France, the UK, Canada and Italy.

Swiss stock exchange's largest one-day gain since the end of 2019

the trigger for the biggest days plus since the end of 2019, especially the surprising interest was the reduction of the Fed. The benchmark index, the SMI put on 2.8 percent to 10.222 points.

The default values rose sharply. To the top, Sika continued with a gain of 5.5 percent. The construction chemicals company would benefit from infrastructure programmes. Was taken of the increase but mainly by Nestle and Roche, whose shares four, or 2.9 percent rose. The demand for the more defensive assets current index was the heavy-weights of the market participants as a Signal that the rise of the market is broad-based.

The third SMI-giant, Novartis, lagged behind with a 0.4 percent rate increase noticeably. This was due, however, to the ex-dividend markdown.

On the broad market, the Clariant shares rose by five per cent after the Saudi major shareholder Sabic bought more shares in the chemicals group, and its stake to 31.5 per cent has increased.

No comment from the SNB

The hope for Intervention by the Central banks because of the virus crisis has been faster than expected meets. A plan for regular decision and a change of 50 basis points have given it last during the financial crisis 10 years ago, said the market strategist of Bank LBBW in a first reaction.

The Swiss national Bank (SNB) is in accordance with current planning on the 19. March monetary policy assessment, prevent. The interest rate move, the Fed did not want to comment on the SNB, on request from AWP. (nag/reuters/sda)

Created: 03.03.2020, 16:07 PM

Updated Date: 03 March 2020, 16:06

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