Shutdown: How Covid Shook the World's Economy

by Adam Tooze

At the G7 meeting, Jerome Powell gave no indication of his next move, but, by the end of the day, he had approved an emergency cut to interest rates. The Fed had not seen fit to inform any of its partners. But it was now clear that the markets needed help and it was up to the Fed to make the first move. In so doing, it opened the space for other central banks to follow. The question was how far conventional monetary policy could really help. As Katie Martin of the Financial Times remarked: “Anyone who can clearly articulate how easier [central bank] policy can fix an economic pullback based on deaths, grounded flights, closed factories and ghost cities is very welcome to get in touch.”50 The new thing to get used to, in the words of one investor, was that “who is in charge here is the WHO, not the central banks.”