This was the biggest single day cut to rates seen since the financial crisis, an indication of how serious
policymakers think the situation could be. Australia also cut its interest rates this week in the face of the
expected slowdown.
Other monetary authorities such as the Bank of England and the European Central Bank are also expected
to do the same, even though they have far less room to cut before they hit zero than the US, which had been
raising rates between 2015 and 2018.
- Government borrowing costs down
Government debt has jumped in price across the developed world in recent days. This is partly because
interest rates are expected to come down, which tends to automatically push up government debt prices.
It’s also because government debt is generally considered a “safe haven” investment in times of crisis.
When the traded price of government debt rises, its interest rate, or yield, automatically falls.
This shows the coordinated falls in US and UK government debt yields in recent weeks, which is normally a
signal of lower expected future growth.
- Global growth forecasts tumble