Traders had been keenly awaiting the outcome of a conference call of central bankers and finance ministers from the G7 most powerful developed nations, with some hoping for a wide-ranging package of economic support.Instead, the G7 finance ministers and central bankers reaffirmed their commitment to use "all appropriate policy tools to achieve strong, sustainable growth and safeguard against downside risks.
Despite the lack of action now, there's a growing view among investors that policimakers will agree on measures to help counter what is one of the greatest threats to the global economy since the financial crisis a decade ago. The Organization of Economic Cooperation and Development on Monday slashed its global growth forecast -- to 2.4% for this year from 2.9% --and warned that the economic fallout from the virus' spread could be even worse.
"What the G7 needs to deliver is not the blunt instrument of lower rates -- these are already at record lows," said Michael Hewson, chief markets analyst at CMC Markets. "What is needed in these difficult times is ample liquidity to ease credit conditions. Above all else, banks will need to be sympathetic on companies that are encountering cash flow problems, allowing them some forbearance or extensions to credit terms.
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