The race to zero interest rate policies (ZIRPs) is reaching a climax.<\/p>\n\n\n\n
On March 3, 2020, The Reserve Bank of Australia dropped its key interest rate 25 basis points (bps) from 0.75% to 0.5%, an all-time low for Australia. In doing so the RBA proclaimed the following in its statement<\/a>:<\/p>\n\n\n\n “The coronavirus has clouded the near-term outlook for the global economy and means that global growth in the first half of 2020 will be lower than earlier expected. Prior to the outbreak, there were signs that the slowdown in the global economy that started in 2018 was coming to an end.”<\/p><\/blockquote>\n\n\n\n The notion that a slowdown in the global economy was already underway caught my attention. As the U.S. stock market ripped higher from October, 2019 to February, 2020 there were a lot of reasons offered to make the rally seem to make sense. in retrospect, one would have to believe that the stock market was looking forward to the global economic recovery. Now that the prospects for that recovery are almost completely gone, it makes sense that the U.S. stock market has effectively wiped out that entire breakout<\/a>. <\/p>\n\n\n\n