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  • The coronavirus outbreak has brought the global economy to a halt like we've never seen before.

  • With a global health emergency sitting at the center of the crisis,

  • every sector of activity has been affected with unemployment soaring and economies shrinking.

  • A recession of this scale has policymakers worldwide stepping up as they attempt to prevent the worst.

  • Central banks were some of the first to step in, but has their approach been effective?

  • Just over a decade ago, the world was grappling with the global financial crisis.

  • Central banksknown as the lenders of last resort, came into the spotlight like they'd never been before.

  • They took several measures to prevent the Great Recession from turning into a depression.

  • And one of the first steps they took was lowering interest rates to rock-bottom levels.

  • So what is a central bank trying to achieve when it lowers rates?

  • The interest rate is what central banks charge other lenders for short-term borrowing.

  • Thisin turnaffects how much interest consumers pay on their loans and earn on their savings.

  • If rates are low, people and businesses can take advantage of cheaper loans,

  • which in turn should boost the economy as they spend more on goods and services

  • or invest in improving productivity. Howeverreal interest rates,

  • which take inflation into account, have been at historic lows since 2009

  • and have never rebounded despite a decade of economic expansion.

  • There are a variety of factors that limit the ability of central banks to affect real interest rates.

  • These include low productivity levels, a surplus of global savings and economic growth prospects.

  • As the coronavirus pandemic started spreading outside China,

  • a flurry of central bank announcements followed.

  • The U.S. Federal Reserve was the first to surprise markets with an emergency cut

  • to interest rates in early March, and it followed with a second cut later that month.

  • With the two separate announcements, the central bank brought its funds rate down

  • to the range of 0% to 0.25%, a level first reached during the global financial crisis of 2008.

  • The committee judged that the risks to the U.S. outlook have changed materially.

  • In response, we have eased the stance of monetary policy to provide some more support to the economy.

  • Hot on the heels of the Fed cut, other central banks also slashed their interest rates,

  • including major players such as The Bank of England, The Bank of Canada,

  • the Reserve Bank of New Zealand and the Bank of Korea.

  • As the global economy went into a tailspin, these institutions all agreed to cut rates

  • as part of a coordinated effort to limit the damage caused by the coronavirus outbreak.

  • So, can low rates save our economies from crisis?

  • The coronavirus is a new kind of economic shock. Unlike the 2008 financial crisis,

  • the virus is first and foremost a health issue, not something that emerged from financial institutions.

  • Many economiststhereforeargue that cheaper loans won't solve the coronavirus crisis.

  • With around a third of the world's population under lockdown,

  • enabling people to spend more is not going to help much since they are all stuck at home.

  • And besides, restaurants, cinemas, and shops are closed

  • which means consumers have far fewer ways to spend their money.

  • Fears of a deepening recession have also dented investor confidence

  • amid a global rout on the stock market.

  • Which is why some experts have raised the following question:

  • have central banks reached the limits of their arsenal?

  • These institutions have tested new and unconventional tools over the last decade,

  • including negative interest rates and cash handouts.

  • In places such as the euro zone and Japan, central bankers have cut rates so low

  • that they have even gone below zero. This means that financial institutions are

  • getting paid to borrow cash and penalized for keeping excess reserves.

  • But arguablythis has also proven ineffective.

  • Japan has had negative rates since 2016, but the world's third largest economy has

  • been struggling with a stagnant economy and very low inflation for years.

  • It's a similar situation in the euro zone, where the European Central Bank lowered rates

  • into negative territory in 2014, and there is no clear timeline for them to revert to normal levels.

  • Lowor even negative rateshave been a feature of the economic landscape for the last decade.

  • With the ongoing health and financial crisis showing no signs of going away,

  • central banks are running out of tricks to mitigate the fallout.

  • More broadly, there is a general consensus that no rate cut, or government funding

  • will end the ongoing economic crisis, at least not until the core issue is solved.

  • Hi guys. Thank you for watching.

  • If you have any more ideas for more CNBC Explains let us know in the comment section.

  • And don't forget to subscribe. I'll see you soon.

The coronavirus outbreak has brought the global economy to a halt like we've never seen before.


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低金利で十分なのか?| CNBCが解説します (Are low interest rates enough? | CNBC Explains)

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    Summer に公開 2021 年 01 月 14 日