In light of unprecedented market activity this week, Marvin Loh, Global Macro Strategist at State Street Global Markets gives his outlook for monetary policy intervention and oil pricing.

"The rapid escalation and unpredictable nature of the Coronavirus (COVID-19) has shaken the solid foundation that central banks felt they were on. For instance, in very short order, the Federal Reserve (Fed) went from saying that rates and the economy were in a good place, to executing the first emergency rate cut since the crisis. The subsequent sell-off in stocks following that rate cut illustrates just how jittery investors have become with global growth, corporate earnings and the very limited monetary tool box following the financial crisis. The BOE this morning took a page from the Fed's playbook, also cutting 50 bps before its scheduled meeting at the end of the month, but included other plans to help brunt the impact of COVID-19 on small businesses, which has been better received than the Fed's moves.

"Having said that, investors have pushed for further cuts despite the generally low level of policy rates even before the virus was identified. The Fed, Bank of China (BOC) and Norges Bank had the highest rates in the developed markets (DMs); and the US and Canada both cut 50 bps last week. This is not enough, with expectations that the Fed will cut another 50-75 bps next week. The European Central Bank (ECB) meets this week and the fact that they have negative yields is not dissuading investors to expect additional cuts this Thursday. The same expectations are expected for all DM central banks, which may be forced to respond, else market volatility will continue/increase.

"Rate cuts may also not be enough, with broad expectations that the central banks will re-introduce quantitative easing (QE) to address coronavirus inspired slowing growth and market volatility. A coordinated effort will also be considered after the G7 held a joint call last week. Of course, only the Fed and BOC acted, raising the question of how coordinated their views actually are.

"If this wasn't enough of a challenge for central banks, the oil shock following the breakdown in talks between Saudi Arabia and Russia will collapse all inflation expectations, at least in the short term. A long war between the two counties could keep oil prices suppressed longer than normal in these shock scenarios, which will also need to be contend with falling demand in the face of the virus. With limited ammunition, central banks need to deal with multiple black swan events at the same time."

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In light of unprecedented market activity this week, Marvin Loh, Global Macro Strategist at State Street Global Markets gives his outlook for monetary policy intervention and oil pricing.

"The rapid escalation and unpredictable nature of the Coronavirus (COVID-19) has shaken the solid foundation that central banks felt they were on. For instance, in very short order, the Federal Reserve (Fed) went from saying that rates and the economy were in a good place, to executing the first emergency rate cut since the crisis. The subsequent sell-off in stocks following that rate cut illustrates just how jittery investors have become with global growth, corporate earnings and the very limited monetary tool box following the financial crisis. The BOE this morning took a page from the Fed's playbook, also cutting 50 bps before its scheduled meeting at the end of the month, but included other plans to help brunt the impact of COVID-19 on small businesses, which has been better received than the Fed's moves.

"Having said that, investors have pushed for further cuts despite the generally low level of policy rates even before the virus was identified. The Fed, Bank of China (BOC) and Norges Bank had the highest rates in the developed markets (DMs); and the US and Canada both cut 50 bps last week. This is not enough, with expectations that the Fed will cut another 50-75 bps next week. The European Central Bank (ECB) meets this week and the fact that they have negative yields is not dissuading investors to expect additional cuts this Thursday. The same expectations are expected for all DM central banks, which may be forced to respond, else market volatility will continue/increase.

"Rate cuts may also not be enough, with broad expectations that the central banks will re-introduce quantitative easing (QE) to address coronavirus inspired slowing growth and market volatility. A coordinated effort will also be considered after the G7 held a joint call last week. Of course, only the Fed and BOC acted, raising the question of how coordinated their views actually are.

"If this wasn't enough of a challenge for central banks, the oil shock following the breakdown in talks between Saudi Arabia and Russia will collapse all inflation expectations, at least in the short term. A long war between the two counties could keep oil prices suppressed longer than normal in these shock scenarios, which will also need to be contend with falling demand in the face of the virus. With limited ammunition, central banks need to deal with multiple black swan events at the same time."