G-7 coronavirus statement promises action as needed

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Officials of most of the world’s largest economies pledged on Tuesday a united front in the battle against the novel coronavirus scare but offered no specific actions.

“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 statement said.

U.S. Treasury Secretary Steven Mnuchin and Federal Reserve Chairman Jerome Powell led a conference call with finance ministers and central bank leaders from each of the nations. Various other officials participated, including Haruhiko Kuroda, the governor of the Bank of Japan.

Markets have been expecting some type of coordinated action to come from global authorities. In the U.S., traders are pricing in aggressive rate cuts from the Fed, including a 50 basis point cut in short-term rates this month followed by additional easing later.

The G-7 statement offered no specifics, and stock market futures fell after it was released but late recovered.

“Alongside strengthening efforts to expand health services, G7 finance ministers are ready to take actions, including fiscal measures where appropriate, to aid in the response to the virus and support the economy during this phase,” the statement said. “G7 central banks will continue to fulfill their mandates, thus supporting price stability and economic growth while maintaining the resilience of the financial system.”

The statement added that authorities from the International Monetary Fund and World Bank also pledge “the use of their available instruments to the fullest extent possible.” The IMF released a statement Monday in which it used similar language, offering “emergency financing, policy advice, and technical assistance” for impacted countries.

Markets have been in turmoil as the coronavirus scare has intensified. Stocks sold off sharply last week, dropping 12% off the Dow Jones Industrial Average, before a historic rally Monday that saw the blue chip index post its strongest one-day point gain ever and biggest percentage gain since 2009. The index was pointing to a drop of more than 200 points at Tuesday’s open.

There have been 91,320 confirmed cases of the COVID-19 strain globally that have led to 3,118 deaths, according to Johns Hopkins tracking. The U.S. has seen 105 cases and six deaths.

In addition to the U.S. and Japan, the G-7 countries are Canada, the U.K., France, Germany and Italy. 

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