Andreas Billmeier, sovereign research analyst at Legg Mason affiliate Western Asset, on the possibility of the European Central Bank and Bank of England following the US Federal Reserve in cutting key benchmark rates.

"So far the Fed sticks out for acting quickly, and there is a fair chance that major European central banks – including both the Bank of England and the ECB – wait for their scheduled meetings to announce policy measures.

"We think the BoE is more likely than the ECB to cut policy rates, simply because they are in a better place to do so. For the ECB, the threshold to cut rates is higher for two reasons: first, deposit rates are already in negative territory. Second, it will take a very elaborate communication effort to unwind the "emergency cut" at a future point in time without sending the market into a frenzy.

"We expect the ECB to mainly look at the indirect impact of the slowing economic activity and, for example ensure appropriate liquidity in the banking system and on corporate balance sheets. In other words, we think there is a higher likelihood of some sort of liquidity provision than of a rate cut, and we cannot imagine a rate cut that comes without additional measures geared at liquidity management.

"If the ECB were to cut its deposit rate, we would expect several other European central banks to follow: Switzerland, but also the BoE, and some of the central banks in Northern and Central Europe.

"To be clear though, there are a large number of central banks that are likely to cut rates sooner rather than later, including many emerging markets.

"To the extent that the economic shock stemming from COVID-19 is perceived as at least partly a demand shock, an easing of the monetary stance can be considered appropriate, and a Fed rate cut has more often than not led to cuts elsewhere."

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Andreas Billmeier, sovereign research analyst at Legg Mason affiliate Western Asset, on the possibility of the European Central Bank and Bank of England following the US Federal Reserve in cutting key benchmark rates.

"So far the Fed sticks out for acting quickly, and there is a fair chance that major European central banks – including both the Bank of England and the ECB – wait for their scheduled meetings to announce policy measures.

"We think the BoE is more likely than the ECB to cut policy rates, simply because they are in a better place to do so. For the ECB, the threshold to cut rates is higher for two reasons: first, deposit rates are already in negative territory. Second, it will take a very elaborate communication effort to unwind the "emergency cut" at a future point in time without sending the market into a frenzy.

"We expect the ECB to mainly look at the indirect impact of the slowing economic activity and, for example ensure appropriate liquidity in the banking system and on corporate balance sheets. In other words, we think there is a higher likelihood of some sort of liquidity provision than of a rate cut, and we cannot imagine a rate cut that comes without additional measures geared at liquidity management.

"If the ECB were to cut its deposit rate, we would expect several other European central banks to follow: Switzerland, but also the BoE, and some of the central banks in Northern and Central Europe.

"To be clear though, there are a large number of central banks that are likely to cut rates sooner rather than later, including many emerging markets.

"To the extent that the economic shock stemming from COVID-19 is perceived as at least partly a demand shock, an easing of the monetary stance can be considered appropriate, and a Fed rate cut has more often than not led to cuts elsewhere."