Alright Star Traders, this is the big one, the big Financial Stability Review that we've been waiting for.
There's a big announcement from the RBA and this is from my home town, here in Australia. At the bottom of this post, I will be providing the PDF from the Reserve Bank of Australia and within the PDF, there is all the information regarding the happenings from the RBA and it's worth a quick read.
The COVID-19 pandemic that is happening all around the world right now, is no doubt causing significant strains in the global financial system. With this have we seen only moderate growth, low inflation and low financial market volatility.
Let's address this, that prior to the pandemic, the prices of a broad range of risky assets were, had been, at high levels, underpinned by low risk-free interest rates and low risk premiums that presumed very little possibility of adverse outcomes.
The outbreak of the virus, which was not even a feature in the outlook at the start of the year, has changed this. The exceptional measures taken to contain COVID-19 are having a major effect on economic activity and the global financial system.
The high level of uncertainty surrounding the size and duration of the economic downturn is accentuated by the uncertainty around the effectiveness of the various measures in containing the spread of the virus.
I have provided a link to further information leading on from what's been said and to how the central banks around the world have responded to the developments by rapidly easing monetary policy and implementing a range of policies designed to support the functioning of the financial system.
Again, this is worth a read and if not that, at least a glance at.