Not a moment too soon, and as a global recession approaches, economic policymakers have started to adopt more aggressive measures to combat the economic fallout from the spread of Covid-19, which is continuing to accelerate across the globe. On the interest-rate front, monetary policy has almost maxed out, with rates either close to zero or negative in the major economies of the United States, the euro zone and Japan. While rock-bottom rates will be helpful in smoothing the functioning of credit markets and lowering some borrowing costs, they will take months to work their way through economies.

It is thus reassuring to see that policymakers have turned to faster-acting fiscal measures, and on a massive scale. The US Congress is considering a US$1 trillion (S$1.45 trillion) package, including support for paid sick leave, higher unemployment benefits, free testing for Covid-19, and food and medical help for those affected. It also contains about US$200 billion in loans for beleaguered sectors such as the airline industry. A separate US$1 trillion for small businesses is also under consideration. European countries are pushing ahead with their own multibillion euro fiscal packages as well as loan guarantees for troubled industries.