ECB and BOE expected to take immediate policy action on coronavirus impact

CNBC reports that the European Central Bank (ECB) and the Bank of England are expected to announce stimulus measures in the coming days, after the Federal Reserve surprised global markets with a large rate cut.

"The ECB will almost certainly try to intervene," Florian Hense, European economist at Berenberg bank said Wednesday.

Data released Tuesday showed euro zone inflation hitting a three-month low in February. This is a crucial data point for the ECB, whose primary mandate is to react to price changes.

The ECB is due to meet next week, but some analysts have not ruled out an earlier decision in Frankfurt, as Powell did Tuesday in the United States.

Some market watchers are expecting a rate cut of 10 basis points in the euro zone and changes to bank lending. However, ECB President Christine Lagarde could also announce additional measures.

"The ECB could introduce a special facility targeting SMEs (small and medium enterprises) hit by the crisis with looser terms and conditions than other open-market operations," Frederik Ducrozet, senior economist at Pictet Wealth Management, said.

The Bank of England (BOE) is also due to meet later this month, but analysts at Nomura are predicting an emergency rate cut this week.

"We have, therefore, adjusted our view to ... an emergency 25bp (basis point) rate cut this week allowing the Bank time to formulate a plan for more targeted easing at the end of the month," two Nomura economists said Tuesday in reaction to the Fed's announcement.

The outgoing governor of the BOE, Mark Carney, said Tuesday that the coronavirus could produce a "large" but temporary hit to the British economy. He had also said previously that the virus is already denting tourism and manufacturing in the U.K.