U.S. and other large economies pledge cooperation to deal with coronavirus
Washington — Seven major economies, including the U.S., pledged Tuesday to use "all appropriate tools" to deal with the spreading coronavirus, while stopping short of immediate actions. The group of major industrial countries, referred to as the G-7, said it was "ready to take actions, including fiscal measures where appropriate, to aid in the response to the virus and support the economy."
The joint statement from the U.S., Japan, Germany, Britain, France, Italy and Canada was issued after a conference call among the finance ministers and central bank presidents, led by U.S. Treasury Secretary Steven Mnuchin and Federal Reserve Chairman Jerome Powell.
"Given the potential impacts of COVID-19 on global growth, we reaffirm our commitment to use all appropriate policy tools to achieve strong, sustainable growth and safeguard against downside risks," the G-7 said.
The G-7 has issued similar statements during periods of market turmoil, such as the September 11, 2001 terrorist attacks.
Markets soared Monday amid a growing conviction by investors that the Federal Reserve and other central banks around the world would cut interest rates in a move to shore up economic growth. Wall Street analysts expect Fed officials to lower rates at their next meeting on March 17-18 and possibly again in April.
Despite the G-7's commitment to work together, the group's response appeared to disappoint some on Wall Street.
"This is a disappointment compared to previous hopes of an immediate and coordinated fiscal package and interest rate cuts, although such hopes had already been dampened by information leaked from 'G7 officials' early this morning," Jennifer McKeown, head of global economics service at Capital Economics, said in a note.
The research firm has said it expects the number of coronavirus cases in the U.S. to climb "exponentially" in the coming weeks and for economic growth to slow. Capital Economics expects the Fed to cut rates by a total of 0.5% by mid-year due to the virus.
Carl Weinberg of High Frequency Economics said in a report that investors "were hoping for a lot more" from the G-7 announcement.
Stock futures in the U.S. were flat Tuesday ahead of the start of trade.