In last week’s Economic Recap report, we discussed recent fiscal and monetary policy actions taken by major developed economies. Essentially, the message from key policymakers was that they are prepared to deploy all tools at their disposal to combat the negative economic effects from the coronavirus outbreak.
The Fed’s announcement today that it will purchase financial assets “in the amounts needed” to fulfill its mandate was in keeping with this commitment. But as of this writing, a negotiation to enact the third U.S. fiscal stimulus package (with a ballpark figure of around $1.3 trillion) has not been completed yet.
Separately, Germany has decided to suspend its policy of maintaining fiscal surpluses. In addition to measures already announced,Germany is now reportedly preparing a fiscal stimulus program worth €60 – 100 billion (1.8 – 3% of Germany’s 2019 nominal GDP).