Will the world's big central banks leave U.S. Federal Reserve Chair Jerome Powell hanging? They're certainly going to try. No major central bank has yet matched the Fed's emergency rate cut in response to the coronavirus outbreak and there is mounting evidence that counterparts in the euro zone, Japan, Britain and Switzerland are keen to avoid a hasty response.
While the coronavirus outbreak is already disrupting global supply chains, slowing industrial activity, grounding flights and hitting financial markets, central banks have more reason to hold out than pull the trigger.
A quick response might exacerbate the market selloff because it could suggest panic on the part of policymakers. It may also be ineffective because monetary policy moves such as rate cuts typically take a while to feed through to the broader economy.
More importantly, most major central banks exhausted much of their arsenal during the years of stimulus following the financial crisis, so any further moves would require an even deeper dive into unconventional waters - which would require time both to design and debate potential policies.
So for now, central bankers want to keep the pressure on governments to take the lead instead, sources familiar with the thinking of some major policymakers said.
"There is immense pressure on us to act - from markets, the media and the Fed's cut - so in the end, we may be forced into an emergency move but we'll try to resist," a source familiar with the European Central Bank's (ECB) thinking said.
"But we're not even sure what we're acting on. Nobody knows the actual impact."
Indeed, Robert Holzmann and Peter Kazimir, both policymakers at the euro zone's central bank, have already gone on record to caution against a quick move.
ECB policymakers did hold an unscheduled call on Tuesday but it was to discuss operational responses to coronavirus, such as whether to hold events and staff shortages, rather than any policy response, sources close to the matter said.
While central banks typically prefer to go their own way, they have acted in concert during times of cross-border contagion, such as during the aftermath of Japan's earthquake in 2011 or the 2008 global financial crisis.
The Fed's surprise rate cut on Tuesday did initially boost markets, but the main U.S. stock indices all ended the day some 3% lower and 10-year U.S. Treasury yields fell below 1% for the first time as the bank's rapid response raised concerns that the coronavirus fallout may be worse than feared.
"The initial market reaction suggests the Fed failed," said Jan von Gerich, an economist at Nordea. "The lessons from history suggest that it would be too early to expect markets to stabilise, and we will likely have to see more central bank easing measures ahead."
The problem for many central banks is that they have few tools left to stimulate economies in the event of major disruption. The key policy rates of the ECB, the Bank of Japan and the Swiss National Bank are all in negative territory and there is an economic and political cost to cutting them further.
To be sure, rate cuts are possible but each move below zero has diminishing returns. Commercial bank margins get further compressed, limiting their ability to transmit softer policy to the wider economy, while super low rates could fuel bubbles in markets such as property, sowing the seeds for problems later.
Negative interest rates are also deeply unpopular in certain political circles because they hit savers used to earning interest on deposits, and can be seen as a form of tax on banks.
'WE ARE NOT ALMIGHTY'
Without much room to manoeuvre on rates, the ECB and the Bank of Japan (BOJ) are both likely to find other tools.
BOJ Governor Haruhiko Kuroda has already pledged to pump more liquidity into markets and speed up asset purchases to calm nerves. Sources close to the ECB, meanwhile, said the bank was looking to provide lending and liquidity to small- and medium-sized firms affected by the coronavirus outbreak.
Bank of England Governor Mark Carney, who is due to hand over to Andrew Bailey on March 16, said on Tuesday that responses to the outbreak would vary from country to country and there would be a mix of monetary and fiscal measures.
Britain's first post-Brexit budget, which is expected to increase public spending, is due on March 11 and some analysts expect the bank to wait and see the extent of any fiscal boost ahead of its policy committee's next meeting on March 26.
Still, more policy action is likely from most big central banks, especially after G7 central bank governors and finance ministers said they were committed to using "all appropriate policy tools" to counter the coronavirus fallout.
The ECB and the BOJ both meet over the next two weeks, giving them a scheduled opportunity to act, though some central bankers worry that if they move quickly, it could ease the pressure on governments to take unpopular decisions in an area that ultimately needs political and fiscal responses.
"We should not get confused. We are not almighty, we do not have the philosopher's stone," ECB Vice President Luis de Guindos said this week.