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Financial Times: Inaction by world central banks after stock market crash could trigger global crisis
Central banks around the world were accused of inaction, causing stock markets to fall. This opinion was published in this newspaper Financial Times (FT).
Economists say the global stock market sell-off is caused by investors panicking over the lack of reaction. Federal Reserve (Fed) USA Employment data was worse than expected. This sentiment itself could spark a global crisis if regulators don’t act, the publication wrote.
Volatility on stock exchanges has reached its highest level since the start of the COVID-19 pandemic. Experts believe that central banks need to create positive expectations among investors, including through statements at the Jackson Hole symposium from August 22 to 24, which will be attended by central bank governors.
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Krishna Guha, vice chairman of Evercore ISI, believes that the risk of a slowdown in the U.S. economy has increased because market turmoil could prompt companies to lay off large numbers of employees. Simon McAdam of Capital Economics noted that the stock market situation “could itself have macroeconomic consequences, either leading to the collapse of large financial institutions or a general tightening of credit conditions.”
US stocks began to fall after the release of labor market statistics on August 2. The country’s authorities reported that the unemployment rate rose to 4.3% in July. Experts said the data pointed to an increased risk of recession. On August 5, stock markets in the Asia-Pacific region plunged.
Domino effect and collapse spread from Asia to other regions Caused Changes in Japanese regulators’ strategy – Until recently, trading was based on the difference in interest rates between the US Federal Reserve System (FRS) and the central bank JapanWhen the U.S. stock market opened on August 5, the Dow Jones Index fall down The Nasdaq was at 2.27%, the NASDAQ at 6.35% and the S&P 500 at 4.27%.
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