Global central bankers from Japan to the U.K. promised to act as needed to stabilize financial markets rattled by the spreading coronavirus as pressure builds on monetary policy makers to do more to safeguard their economies.

In an emergency statement on Monday, Governor Haruhiko Kuroda said the Bank of Japan would “strive to provide ample liquidity and ensure stability in financial markets.” The Bank of England followed up by saying it’s working with U.K. authorities and international partners to “ensure all necessary steps are taken to protect financial and monetary stability.”

The commitments came after Federal Reserve Chairman Jerome Powell on Friday opened the door to cutting interest rates in the U.S. to contain what he called the “evolving risks” to economic growth from the virus.

The prospect of central banks’ action helped halt the worst rout in stocks since the global financial crisis more than a decade ago. Money markets now see the Fed lowering its main rate by 50 basis points this month and give a 70 per cent chance the European Central Bank will pare its by 10 basis points.

There is even speculation the Fed will move before its policy makers are set to gather on March 17-18 and some economists see the potential for global policy makers to coordinate cuts for the first time since 2008, when central banks acted to prevent the collapse of the international banking system.

Investors increasingly bet the central banks of Australia and Canada will ease at meetings already scheduled for this week.

“Global central banks will almost certainly all induce one form of easing or another, “ said Vishnu Varathan, head of economics and strategy at Mizuho Bank Ltd. in Singapore.

In another sign of increasing worry, the OECD said global economic growth will sink to levels not seen in over a decade as the outbreak hammers demand and supply.

The French government said on Monday that Group of Seven finance ministers will hold a conference call this week to coordinate their response to the spread of the virus. Italy is already seeking to widen its budget deficit to pay for at least 3.6 billion euros (US$4 billion) in proposed emergency economic measures.

Just a week ago, key central bankers were saying it was too soon to respond to the outbreak. The plunge in global stocks has forced a change in stance. Economists at Goldman Sachs predict the Fed will slash its key rate 50 basis point this month and ultimately by 100 basis points in the first half of the year. The Bank of England will cut by 50 basis points and the European Central Bank by 10 basis points, it said.

“Global central bankers are intensely focused on the downside risks from the virus,” economists led by Jan Hatzius said in a report on Sunday. “We suspect that they view the impact of a coordinated move on confidence as greater than the sum of the impacts of each individual move.”

Japan to Indonesia

The Bank of Japan backed up Monday’s promise to help markets by offering to buy 500 billion yen (US$4.6 billion) of government bonds to provide liquidity. Indonesia’s central bank lowered the amount lenders need to keep on reserve to shore up liquidity in its markets.

By not alluding to monetary policy as Powell did, Japan’s statement revealed the constraints the BOJ and many other central banks are under. Japan’s key rate is already minus 0.1 per cent compared to the Fed’s 1.5 per cent to 1.75 per cent range.

The ECB is also limited by a deposit rate that stands at minus 0.5 per cent. Prior to the virus outbreak, policy makers were signaling a reluctance to reduce it even further given concern that banks, who are already seeing profit margins squeezed by negative rates, might pull back on lending.

President Christine Lagarde said last week that the ECB didn’t yet think the outbreak will have a lasting impact on inflation, its primary mandate.

An ECB spokesman declined to comment on whether a statement would be issued on Monday, and referred back to Lagarde’s comments of last week.

“We are vigilant, we are mobilized, but we remain calm and proportional in the responses we need to have,” Bank of France Governor Francois Villeroy de Galhau said on BFM Business television on Monday.

Less Effective?

Even before the latest crisis, economists were questioning the benefits of ultra-loose monetary policies given more than 700 interest rate cuts and several rounds of bond-buying since the financial crisis. They boosted asset prices, but failed to generate substantial rebounds in economic growth.

For central bankers, the new challenge is that easier monetary policy may be even less effective to combat the economic pain posed by a health emergency.

That’s because by shutting workplaces in China and increasingly abroad, the virus is dealing a blow to the world’s capacity to produce goods. Lower rates won’t help manufacturers whose factories are closed or which lack materials to make their own products. On the demand-side, they would likely also fail to spur consumers to shop or travel if they’re worried about infection.

But easier monetary policies should offset tighter financial conditions, support markets and maintain the supply of credit, thus helping to drive a rebound in demand once the virus is under control. Inflation below target also gives the central banks scope to act.

Fresh evidence of the economic shock triggered by the virus came Monday as IHS Markit reported its Chinese factory index had dropped to the lowest since the series began in 2004. Gauges for Japan and South Korea also slumped.

“Rate cuts are not the silver bullet, although they can support markets somewhat,” said Jerome Jean Haegeli, chief economist at the Swiss Re Institute in Zurich.

Governments will likely have to help too. Economists at Morgan Stanley predict the combined fiscal deficit of the four largest advanced economies plus China will now run to at least 4.7 per cent of global gross domestic product this year, the biggest since 2011.