In this Oct 5, 2016  photo, two men stand at the viewing platform of the 'Maintower' and look to the headquarters of the European Central Bank (ECB) in Frankfurt, Germany. Banks across Europe are struggling as their profits have fallen amid an ongoing period of low interest rates. (THOMAS LOHNES / GETTY IMAGES VIA BLOOMBERG)

Global central banks remain under pressure to do more to support their economies through the coronavirus recession even after driving interest rates to record lows and pledging to spend trillions of dollars on asset purchases.  

The US Federal Reserve, Bank of Japan and European Central Bank, which together cover almost half of global output, will all convene meetings of policymakers this week after the pandemic-driven freezing of economies and turmoil in financial markets propelled them into action.  

With governments this week set to confirm multi-year expansions ended in the US and euro area in the first quarter, monetary policymakers may have to do more to limit the recession and speed the recovery. 

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The extremity of the virus crisis is forcing central banks to push the limits of the possible. 

Tom Orlik, Chief economist, Bloomberg Economics 

Among the options: extending the quantitative easing, helping ease credit to troubled businesses and committing to rock-bottom rates for longer. 

“The extremity of the virus crisis is forcing central banks to push the limits of the possible,” said Tom Orlik, chief economist at Bloomberg Economics. 

“We expect the ECB to expand its fire fighting Pandemic Emergency Purchase Programme and the Bank of Japan to roll out more support for corporates. Ahead of the game in terms of the size and scope of stimulus, the Fed won’t add additional support, but will confirm it has space to do more.”  

Federal Reserve  

The April 28-29 policy meeting will be the first scheduled gathering since January, but officials have met multiple times since then.  

They have cut rates to virtually zero and rolled out a series of emergency and unorthodox lending facilities designed to backstop markets and keep credit flowing to businesses. The Fed’s balance sheet has already reached US$6.57 trillion.  

Economists in a Bloomberg survey have limited expectations for any substantial changes at this week’s meeting. Large majorities, 90 percent and 87 percent, said they didn’t expect policymakers to offer any additional guidance on how long they intend to keep rates near zero, or on the future pace of large-scale asset purchases.  

But investors will be looking for any indications from Chairman Jerome Powell on how deep the Fed fears the recession will go and its outlook for recovery.

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The central bankers are also still being lobbied to do more as they try to get their Main Street lending program up and running. There are calls from some lawmakers to allow more cities and small counties to borrow from it.  

European Central Bank  

The European Central Bank sets policy on Thursday with a heavy weight on its shoulders as governments argue over joint fiscal action.  

After President Christine Lagarde told leaders last week that they may have done too little, too late, and warning that the euro-area economy could shrink as much as 15 percent this year, they still failed to agree on how to structure a recovery fund.  

Most economists expect the central bank will keep monetary policy on hold this week. It only recently pledged to bump up its asset purchases by more than a trillion euros this year, and made it easier for banks to finance their loans to companies.   

But one in four respondents to a Bloomberg survey said the ECB could still boost the size of its pandemic purchase program from 750 billion euros (US$812 billion) as early as Thursday. Most see it happening by September.  

Having agreed last week to accept junk bonds as collateral for bank loans, there is also speculation is will add sub-investment grade assets to its purchase plan list.  

Bank of Japan  

After stepping up its buying of exchange-traded funds and corporate bond, the Bank of Japan will on Monday discuss allowing unlimited government bond purchases, replacing their current 80 trillion yen target, the Nikkei reported on Thursday.  

Governor Haruhiko Kuroda and fellow policymakers will likely take further steps to get credit to businesses hit by the pandemic, according to a Bloomberg survey of economists.  

Some 83 percent of 40 analysts forecast the BOJ will introduce new tools to support bank lending for businesses at a meeting now shortened to one day.  

Options include increasing purchase targets for commercial paper and corporate bonds or widening a new lending operation so smaller firms can benefit via smaller banks.