• US rate cut possibly part of a concerted action by the central banks of the developed world
  • This does not necessarily mean rate cuts in the Eurozone or Japan

To Erste Asset Management (www.erste-am.com), yesterday’s rate cut by the US Fed of 0.5 percentage points to a target band of 1.00% to 1.25% for the Fed funds rate did not come as a surprise. The central bank had already issued a statement last Friday according to which it would react accordingly to the economic risk created by the coronavirus. The only “extraordinary” as-pect to Erste AM Chief Economist Gerhard Winzer was the “relatively large” extent.

“The rate cut by the ‘most important central bank in the world’ could be part of a concerted ac-tion by the central banks of the developed world.” In the early morning hours of the very same day, the Australian central bank (RBA) had already cut its key-lending rate by 0.25 percentage points to 0.5%. “In countries where the interest rates are already very low such as in the Euro-zone or Japan this loosening strategy does not necessarily have to include rate cuts. Monetary loosening can also be implemented via high liquidity provided to the banks (LTRO), expanded purchase programmes, or guidance of the market expectations (forward guidance),” as Winzer points out.

Either way, the rate cut helps soften the tightening financial environment (decline in share prices, higher credit spreads, higher volatility). This is meant to contain a negative feedback loop of fall-ing share prices and economic growth, as Winzer concludes.
Photo: Erste AM Chief Economist Winzer: US central bank wants to thwart the tightening fi-nancial environment created by the coronavirus by cutting its interest rates

Gerhard Winzer, Photo: Daniel Hinterramskogler, all rights held by Erste AM, publication free of charge

About us:

Erste Asset Management (Erste AM) coordinates, and is responsible for, all asset management activities within Erste Group. At our offices in Austria, Germany, Croatia, Romania, Slovakia, the Czech Republic, and Hungary, we manage assets of about EUR 64.19bn (as of 30 December 2019).

Erste Asset Management has been awarded the title of Best Investment Company of the Year by the trade magazine “Börsianer”.


For enquiries, please contact:
Communications & Digital Marketing

Armand Feka
Tel. +43 (0)50 100 12341
E-Mail: armand.feka@erste-am.com

Erste Asset Management GmbH

Am Belvedere 1, A-1100 Wien
Sitz Wien, FN 102018b,
Handelsgericht Wien, DVR 0468703


This document is an advertisement. All data is sourced from Erste Asset Management GmbH, unless indicated otherwise. Our languages of communication are German and English.

The prospectus for UCITS (including any amendments) is published in Amtsblatt zur Wiener Zeitung in accordance with the provisions of the InvFG 2011 in the currently amended version. Information for Investors pursuant to § 21 AIFMG is prepared for the alternative investment funds (AIF) administered by Erste Asset Management GmbH pursuant to the provisions of the AIFMG in connection with the InvFG 2011.

The fund prospectus, Information for Investors pursuant to § 21 AIFMG, and the key investor document/KID can be viewed in their latest versions at the  web site www.erste-am.com within the section mandatory publications  or obtained in their latest versions free of charge from the domicile of the management company and the domicile of the custodian bank. The exact date of the most recent publication of the fund prospectus, the languages in which the key investor document is available, and any additional locations where the documents can be obtained can be viewed on the web site www.erste-am.com. A summary of investor rights is available in German and English on the website www.erste-am.com/investor-rights as well as at the domicile of the management company.

The management company can decide to revoke the arrangements it has made for the distribution of unit certificates abroad, taking into account the regulatory requirements.

Detailed information on the risks potentially associated with the investment can be found in the fund prospectus or Information for investors pursuant to § 21 AIFMG of the respective fund. If the fund currency is a currency other than the investor's home currency, changes in the corresponding exchange rate may have a positive or negative impact on the value of his investment and the amount of the costs incurred in the fund - converted into his home currency.

This document serves as additional information for our investors and is based on the knowledge of the staff responsible for preparing it at the time of preparation. Our analyses and conclusions are general in nature and do not take into account the individual needs of our investors in terms of earnings, taxation, and risk appetite. Past performance is not a reliable indicator of the future performance of a fund.

The public sale of shares in the specified fund in Germany was registered with the Federal Financial Supervisory Authority, Bonn, pursuant to the German Kapitalanlagegesetzbuch (KAGB). The payment and information office in Germany is HSBC Trinkaus & Burkhardt AG, Königsallee 21–23, D-40212 Düsseldorf. Orders for the return of shares in the fund(s) can be submitted to the German payment and information office, and share redemption proceeds, any dividends or other payments can be paid out to Shareholders (in cash in the local currency) by the German payment office upon request. In addition, all information required by investors before and after the conclusion of an investment agreement – i.e. the fund terms and conditions, the fund prospectus, the Information for Investors pursuant to § 21 AIFMG, and the key investor document and the annual and semi-annual reports – is available free of charge at the German payment and information office. In Germany, the issue and return prices of shares are published in electronic form on the web site www.erste-am.com (and also at www.fundinfo.com). Any other information for Shareholders is published in the Bundesanzeiger, Cologne.