G7 commits to using 'all appropriate tools' to protect their economies

Finance ministers and central bankers from many of the world's most advanced economies committed themselves to using "all appropriate policy tools" to guard against downside risks to the economy.

Yet although they were monitoring markets, they did not specify which measures they would employ.

Following a 30 minute conference call, officials from the US, Japan, Germany, UK, France, Italy and Canada issued a statement saying: "G-7 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.

"G-7 central banks will continue to fulfill their mandates, thus supporting price stability and economic growth while maintaining the resilience of the financial system."

According to some economists, under a worst case scenario economic growth across the globe could grind to a halt in 2020, which figures from the World Bank showed would be slightly better than the outright contraction seen in 2009 when GDP fell 1.7%, but on a par with the recession seen in the early 80's.

Some economists believed that Canada might become the first G-7 central bank to lower rates in response to the hit to its economy from the COVID-19 coronavirus, with rate-setters in Ottawa set to meet to decide on policy on the following day.

Australia and Malaysia lowered their main policy rates earlier in Tuesday.

And Fed funds futures had fully-priced in a 50 basis point rate cut from the US central bank, the Federal Reserve, when its policymakers next met on 18 March to 1.5-1.75%.

Indeed, there was even some 'market chatter' to be heard of a possible reduction before then - an exceedingly rare ocurrence.

Fed funds futures had also nearly price-in another 50 basis points of rate cuts for throughout the end of 2020.

Since the turn of the century, the Fed had cut its main policy rate on only five occassions outside of regularly-scheduled policy meetings, including after the bursting of the technology bubble in early 2001, following the 9-11 attacks and after the collapse of US investment bank Lehman Brothers in late 2008.