The US Federal Reserve, for example, is now widely expected to cut interest rates by half a percentage point later this month, and investors are hoping governments will boost spending after global markets suffered their worst rout since 2008 last week.

The prospect of coordinated intervention by some of the world’s biggest economies including the United States, Germany and Japan helped extend the recovery in oil prices and stock markets on Tuesday, with major indexes in Europe opening with gains and US futures pointing higher.

Yet investors hopes of a significant response by policymakers could be dashed. The G7 call is due to take place at 7:00 a.m. ET, according to officials, but it’s not yet clear when a statement will be issued.

Analysts at Deutsche Bank said Tuesday that G7 countries need more time to settle on a “truly” coordinated response to coronavirus, and that markets are likely to react negatively if officials do not emerge from their meeting with something concrete.

Sebastien Galy, a strategist at Nordea Asset Management, said it was unlikely that a coordinated monetary response would be announced at this stage because the G7 economies face different threats from coronavirus.

He said the G7 is likely to issue a statement that’s limited to “some points of global agreement and a promise for some coordinated action.” Galy said the current market “euphoria” is unlikely to last under the circumstances, and he expects two more weeks of “very elevated volatility as the reality sinks in.”

Coronavirus fears

There have now been more than 90,000 confirmed cases of coronavirus worldwide, with infections on every continent except Antarctica. The virus has killed over 3,100 people as it spreads. South Korea now has over 5,100 cases and 29 deaths. Six patients have died in the United States.

The Organization for Economic Cooperation and Development warned Monday that global economic growth could be cut in half this year if the outbreak continues to spread. It called for an immediate response to contain the outbreak, recommending that governments increase spending and central banks implement policies to help cushion the blow from the virus.

Some central banks in smaller economies have already cut rates, while global heavyweights have sought to reassure investors that they’re prepared to limit the economic fallout.

The Bank of Japan has said it would provide “ample liquidity” to keep financial markets stable, and the European Central Bank on Monday said it stands “ready to take appropriate and targeted measures.” Mark Carney, the governor of the Bank of England, said Tuesday that the central bank would take “all necessary steps to support the UK economy and financial system” through an economic shock “that could prove large but will ultimately be temporary.”

But questions remain about how much policymakers can really do to mitigate the coronavirus shock to the economy, raising the possibility that any stabilization in markets will be short-lived. Interest rate cuts, analysts suggest, are not the best way to fight a global health crisis.

Central banks also have far less ammunition to deploy than they did a decade ago. Interest rates are already at or near record lows, and central bank balance sheets have swollen by trillions of dollars during years of asset purchases, limiting the options to create even more cheap money.

— Eoin McSweeney and Julia Horowitz contributed reporting.

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