The G-7 conference call is over and the central bankers have not delivered any concrete policy action, it is a statement of intent - "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".

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Reacting to the statement, former chief economist of International Monetary Fund (IMF) Kenneth Rogoff said on Tuesday that there was a lot being expected from the G-7 ministers but they are not doctors to treat the virus.

Nilesh Shah, managing director of Kotak Mahindra Asset Management, said the first priority for any market be it India or outside will be on the medical side.

Markets have taken for granted central banks option, they always believe that the central bankers will provide necessary financing and cut interest rates whenever there is a crisis, said Shah.

Therefore, right now market’s focus will be far more on medical sciences rather than the financial engineering or financial policy, according to Shah.

Arvind Sanger, managing partner of Geosphere Capital, said: “The markets are getting a little bit of lift but I think we are in this phase where we know that the monetary and fiscal authorities are ready to support the economies through both cutting rates and any deficit spending that might be needed to help offset the effects of coronavirus on economies but we don’t know how deep will be the effect on the economies from the direct hit on their own coronavirus cases, how they evolve."

"So, we are in this waiting phase on both sides, on understanding the impact and on understanding the magnitude of what the central bankers and finance ministers and the governments will do."

"I think that the markets are at least getting a little bit of boost that the authorities are paying attention and are prepared to do stuff but we don’t know what yet.”

Ananth Narayan, professor of finance at SP Jain Institute of Management and Research, said: “I tend to agree with Nilesh Shah, we have to wait for the actual virus story to pan out to figure out what the medium-term impact on the economy is going to look like and at the moment what we are hearing from central bankers and from the government helps in terms of sentiments and helps in terms of asset prices, doesn’t help in terms of the economy itself."

As far as central banks are concerned globally, they would rather not do anything at this point in time, he added.

They are very conscious that they have very little ammunition left.

Some central banks are at zero percent or negative rates already, US Fed has some room, but they also know it is very limited and "we have heard former Fed governor say there is not enough monetary space available for the next recession".

"So the last thing you want to do is to expend precious bullets when you are practically pushing on a string and you know the impact on demand side is not going to be much. The central bankers probably feel being held at ransom by financial markets and asset prices right now.”

On Fed rate cut

Jahangir Aziz, head of emerging markets at JP Morgan, said, “My sense is that March 18 is probably when the Fed is going to make change in monetary policy. We have about a 50 basis points (bps) rate cut for March 18 and then another 25 bps in April.”

Ajay Srivastava, CEO of Dimensions Corporate Financial Services, said: “The reason we are happier with the Indian market at this point of time is because the price correction has now brought it in line with the true economic reality.”

First Published:Mar 3, 2020 9:57 PM IST