Central Banks Have 'Far Less Ammunition' to Save the Global Economy From Coronavirus

Central banks around the world, including theU.S. Federal Reserve, have lowered interest rates to support their respective economies amid a rapidly spreading coronavirus and more are expected to follow suit.

But investors and economists said there's not much monetary policy can do to save the global economy, especially when some major central banks such as theEuropean Central BankandBank of Japan have already cut interest rates into the negative territory.

"The fact is, we're coming into this crisis with far less ammunition globally. It's not just Europe or Japan, even inChinathey have much less ammunition than the last time they had to launch a stimulus package," Alex Wolf, J.P. Morgan Private Bank's head of investment strategy in Asia, told CNBC's"Squawk Box Asia"on Wednesday.

Wolf's comment came as the new coronavirus also called COVID-19 is quickly spreading globallyand beyond its epicenter in China. Concerns over the economic hit from the virus resulted in theFed making an emergency rate cutof 50 basis points on Tuesday. Lowering interest rates make borrowing costs cheaper and could encourage businesses and households to take loans and spend, which will in turn stimulate the economy.

Before the Fed's surprise cut, central banks inAustraliaandMalaysiaalso took rates lower. Analysts expect more to do the same. Major central banks that have scheduled meetings in the coming weeks include the ECB, BOJ andBank of England.

Brian Martin, senior international economist at Australian bank ANZ, outlined in a Wednesday report the possible moves by those three major central banks:

The European Central Bankis expected to cut its deposit rate by 10 basis points before its next meeting scheduled on March 12.The ECB's current deposit rate is at a record low of -0.5%

The Bank of Japan could also cut rates deeper into negative territory

The Bank of England is expected to cut rates by 25 basis points, possibly before its Mar. 26 meeting

But rates globally have generally stayed low with some at negative levels since they were cut after the global financial crisis. That means some central banks may not have room to take rates much lower, said analysts. For those that still do, any rate cut may not be effective in lifting economic activity, they added.

If this turns into a pandemic that engulfs the United States, it's pretty difficult to envision the U.S. economy getting through without a full-blown economic recession, which means the entire global economy will be in recession.

Adopted and Modified from: https://www.cnbc.com/2020/03/04/coronavirus-federal-reserve-other-central-banks-cut-interest-rates.html

a)"But investors and economists said there's not much monetary policy can do to save the global economy, especially when some major central banks such as theEuropean Central BankandBank of Japan have already cut interest rates into the negative territory." 2^nd Paragraph

i)Suggest any others TWO (2) monetary tools that could be serve as alternative to conventional monetary policy such as interest rate cutting.

ii)From the above statement, does it mean Europe and Japan are both facing liquidity trap?