Earlier this year, the COVID-19 pandemic and the economic fallout that ensued have pushed governments and central banks to make massive stimulus efforts.
Thing is, these harsh (but necessary) measures are gonna cost economies. A LOT.
In case you were too busy figuring out how to pronounce “X Æ A-12“, I’ve made a list of the monetary and fiscal policy changes that major economies have seen so far since March:
Australia
March 3 | Reserve Bank of Australia (RBA) cut its interest rates by 50 basis points to a record low of 0.50% |
March 11 | FISCAL: Government unveils $2.4 billion AUD health package |
March 12 | FISCAL: Government announces a $17.6 billion economic stimulus package that includes tax relief and cash payments for welfare recipients |
March 19 | In an out-of-schedule meeting, RBA cut its rates by another 25 basis points to an all-time low of 0.25% |
RBA will buy government bonds and target 0.25% yield on 3-year bonds | |
RBA to provide a $90 billion term funding facility to help small and medium-sized businesses | |
RBA will conduct daily one-month and three-month repo operations and weekly long-term repo operations “until further notice” | |
March 23 | FISCAL: Australian parliament passed Coronavirus Economic Response Package Omnibus Bill 2020 that involves 80 billion AUD in stimulus for jobs and businesses |
March 24 | RBA pumps 6.9 billion AUD into the financial system, extends gov’t bond purchase program |
March 31 | Government expanded lockdown measures, including penalties for social distancing violators and additional hospital beds, as well as business subsidies |
April 1 | FISCAL: PM Morrison announced $973 million package for childcare sector |
April 15 | FISCAL: Government sells 13 billion AUD ($8.3B) worth of government bonds, the highest at the time |
May 5 | RBA maintains interest rates at 0.25% |
RBA predicts -10% GDP in H1 2020 and unemployment to peak at 10% “over the coming months” | |
May 8 | RBA sees 6% GDP in 2020, unemployment to remain at around 7.5% through 2021 |
May 13 | FISCAL: Government sells 19 billion AUD ($12.3B) worth of government bonds, a new record high |
New Zealand
Canada
March 4 | Bank of Canada (BOC) cut its interest rates by 50 basis points from 1.75% to 1.25% |
March 12 | BOC broadens scope of bond buyback program, done weekly across all benchmark maturity sectors “until further notice” |
BOC temporarily adds bi-weekly Term Repo operations for 6 and 12-month terms | |
March 13 | In an unscheduled meeting, BOC cut its rates by another 50 basis points to 0.75% |
BOC: “ready to adjust monetary policy further if required” | |
BOC announces plans to broaden eligible collateral of its Standing Term Liquidity Facility | |
BOC opens a new Bankers Acceptance Purchase Facility for small and medium-sized businesses | |
FISCAL: Government announces $10 billion credit program to “coordinate financing and credit insurance solutions for Canadian businesses” | |
FISCAL: Government lowers Domestic Stability Buffer requirement for domestic systemically important banks by 1.25% to free up $300 billion worth of lending capacity for large Canadian banks | |
March 18 | FISCAL: Government announces 82 billion CAD in stimulus, with 27 billion CAD allotted for direct support for individuals and 55 billion CAD for tax deferrals for households and businesses |
March 25 | FISCAL: Canadian gov’t doubles value of COVID-19 stimulus package to 52 billion CAD, announces cash loan delays |
March 27 | BOC makes second unscheduled rate cut, bringing rates to 0.25% |
BOC launches Commercial Paper Purchase Program (CPPP) to help “alleviate strains in short-term funding markets” | |
BOC to begin acquiring government securities in the secondary market. Purchases start at 5 billion CAD per week | |
Gov’t boosts wage subsidy to 75% for small and medium businesses | |
April 1 | BOC starts quantitative easing with 1 billion CAD bond purchase |
April 15 | BOC maintains interest rates at 0.25% |
BOC introduces the Provincial Bond Purchase Program worth 50 billion CAD to supplement its Provincial Money Market Purchase Program | |
BOC introduces its new Corporate Bond Purchase Program worth up to 10 billion CAD in investment-grade corporate bonds in the secondary market | |
BOC extends its term repo facility to permit funding for up to 24 months | |
May 1 | Tiff Macklem is named new BOC Governor. Macklem hints openness to negative rates |
May 4 | BOC Deputy Governor Carolyn Wilkins: Pandemic will cause GDP to fall as much as 15% – 30% in Q2 2020 from its late 2019 levels |
Japan
March 10 | FISCAL: Government announced 1 trillion JPY worth of aid, with 500 billion JPY earmarked for zero-interest loans to small and mid-sized businesses |
March 13 | In an unscheduled decision, the Bank of Japan (BOJ) announced its 200 billion JPY purchase of government bonds with five to ten years maturity |
BOJ injects 1.5 trillion JPY worth of liquidity via lending for two weeks | |
March 16 | After an unscheduled meeting, BOJ decides to double its annual ETF and J-REITS purchases to 12 trillion JPY and 180 billion JPY respectively |
BOJ will increase target bond and commercial paper purchases by 2 trillion JPY by September | |
BOJ to provide 8 trillion JPY worth of loans against corporate debt at 0.0% interest rate | |
BOJ lowers dollar funding loan rate by 0.25%, offered on a weekly basis with 84-day maturity | |
Kuroda: “If necessary, we can deepen negative rates further” | |
March 19 | BOJ makes an unscheduled purchase of 1.3 trillion JPY worth of government bonds |
March 24 | Government decides to postpone Tokyo 2020 Olympics to summer of 2021, considers cash handouts topping 12,000 JPY for all in Japan |
March 30 | FISCAL: Japanese gov’t plans to boost bond issuance by $149 billion to fund massive stimulus package |
April 1 | FISCAL: PM Abe to add to $555 billion in stimulus, agrees to $2,800 in cash payouts to households |
April 16 | Government declares nationwide state of emergency |
April 20 | FISCAL: Government adds 25.69T JPY to the initial 108.2T JPY emergency package after decision to provide 100,000 JPY cash handouts to all individuals (instead of 300,000 per household) |
April 27 | BOJ keeps interest rates unchanged at -0.10% as expected |
BOJ removes 80T JPY annual pace guidance, vows to buy government bonds “without setting an upper limit” to keep long-term interest around 0% | |
BOJ almost triples maximum amount of commercial paper and corporate bonds to 20T JPY | |
BOJ introduces Special Funds-Supplying Operations to provide loans against corporate debt with maturity up to one year at 0.0% interest rate | |
BOJ predicts 3% to 5% GDP contraction in FY 2020, sees CPI at -0.3% to -0.7% | |
May 12 | Kuroda: near-term focus is on easing corporate funding strains and stabilising financial markets, rules out purchase of municipal bonds |
FinMin Taro Aso: cutting tax not on the table “for the time being” | |
May 14 | Government removes 39 prefectures from state of emergency |
United Kingdom
March 11 | Bank of England (BOE) made an unscheduled announcement to cut its interest rates by 50 basis points to 0.25% |
BOE introduces a new Term Funding scheme for small and medium-sized enterprises, offering four-year funding over the next 12 months. The scheme could provide 100 billion GBP in term funding. | |
BOE to maintain its sterling non-financial investment-grade corporate bond purchases at 10 billion GBP | |
BOE will maintain its stock of U.K. government bond purchases at 435 billion GBP | |
Financial Policy Committee (FPC) cut the “UK countercyclical capital buffer rate” from 1% to 0%. It’s expected to support 190 billion GBP in business lending | |
FISCAL: Government announces 30 billion GBP stimulus plan (5 billion GBP for the health care system; 7 billion GBP for the labor market, and 18 billion GBP for looser fiscal policies) | |
March 19 | In a special meeting, BOE cut its interest rates by 15 basis points to an all-time low of 0.1% |
BOE increased its asset purchasing program by 200 billion GBP | |
March 24 | U.K. locked down as PM Johnson acts on “national emergency”, U.K. Parliament set to close for four weeks |
April 9 | BOE reactivates Ways and Means (W&M) facility, which allows the government to “temporarily” borrow money directly from the central bank (instead of the markets) |
May 11 | PM Johnson announces plans to ease lockdown measures as part of the “three-phase strategy” to reopen the economy |
May 12 | FISCAL: Government extends end of wage subsidy program – which pays workers on leave 80% of their monthly wages up to £2,500 – from end of July to end of October |
Eurozone
United States
That’s it for my list this week!
Will we see more stimulus come our way in the next couple of days or weeks? It’s possible.
Are these measures enough to help prop the economy in the months ahead? I guess we’ll find out.