Friday, November 13, 2020

Why Did This Central Bank Trio Speech Fail To Stimulate The Market?

 Federal Reserve (Fed) Chairman Jerome Powell, European Central Bank (ECB) President Christine Lagarde and Bank of England (BOE) Governor Andrew Bailey took part in discussions at the ECB forum, each seeking to offer an optimistic view of the economy.

However, statements from the central bank trio failed to boost market sentiment weakened by concerns over the increase in Covid-19 cases, overshadowing investor confidence in positive reports on the effectiveness of the vaccine by Pfizer.

According to Powell, the good news about the vaccine is good news for the medium term and the central bank also sees the economy being on a strong path towards recovery.

However, the main risks to the economy remain due to the Covid-19 pandemic which is still unstoppable in the country causing it to be more challenging in the coming months. It is also too early to assess the implications of the vaccine in the near future.

Powell also reiterated his view that more action needs to be taken by the Fed and Congress, especially the implementation of additional fiscal stimulus measures is needed.

BOE Governor Andrew Bailey, meanwhile, welcomed reports on the effectiveness of the Pfizer vaccine which could reduce economic uncertainty.

Bailey also said that the financial sector was ready for Brexit, but still hoped that the UK and the European Union (EU) could reach an agreement before the deadline.

In addition, ECB President Lagarde said the vaccine had helped alleviate some of the uncertainties but stressed that the economy was still facing difficult times. The ECB is expected to do more easing at the next policy meeting to support the economy.