Money Minute Monday 15 March: the virus and the damage done

Good morning and welcome to Money Minute, your comprehensive preview of this week’s biggest financial stories.

Last week was a historic week for markets. Following in the footsteps of the Federal Reserve, the Bank of England slashed the UK’s key interest rate to just 0.25%, while Rishi Sunak’s first Budget unveiled a host of measures to tackle coronavirus disruption with extra government spending.

Meanwhile, the European Central Bank took steps to prop up the eurozone banking sector, which were followed by moves from the wider European Union to encourage member states to boost spending – which Germany very much took the lead on, guaranteeing unlimited liquidity to companies where necessary.

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Amid all that, many global markets – including the UK – saw some of their worst falls on record, and we entered a pretty comprehensive global bear market (where markets have fallen by 20% or more from their most recent highs).

So what does this week hold?

Everyone will be keeping a close eye on coronavirus infection figures across the globe. We can almost certainly expect the news on that front from both the US and most European countries to get progressively worse. The key for managing expectations will lie with hopes that the infection numbers coming out of China continue to improve, and that the rate of infection in Italy slows down.

As for economic data, we should start to get a proper look at just how much damage has already been done, particularly in Asia. The Bank of Japan is expected to cut interest rates when it meets on Thursday. The economy has been hard hit by coronavirus, with tourism, exports and consumption all impacted.

And in the US – crucially – the Federal Reserve is expected to slash interest rates yet again, perhaps even as far as 0% when it next meets on Wednesday. With the sheer volume of fiscal and monetary stimulus hitting the markets, it will be interesting – to say the least – to see where we are this time next week.

Stay calm, wash your hands, and have a good week!