RBA took a step towards the positive
It's too early to assume that the virus won't be as bad as feared but it's not too early to ponder how central banks would manage that.
If we take what the market is telling us at face value then central banks are going to have to dial down extreme monetary policy at some point. The first step towards that will be acknowledging that the situation isn't as bad as anticipated.
The RBA did that earlier today "it is possible that the depth of the downturn will be less than earlier expected" as restrictions have been eased earlier than anticipated. The Bank of Isreal last week marked up GDP forecasts.
Last week, RBA Governor Lowe also noted that corporate bond spreads aren't exceptionally high and that on government bonds he "didn't see the need to do more."
The next FOMC decision is June 10 and I don't think they're ready to change tone yet given the protests but it's coming. The next question is: How will the market react. At the moment, the market likes the idea that the Fed and others will keep rates pinned until inflation rises but they might be willing to dial back QE more than anticipated.
If that's the case, watch out for a taper-tantrum.
