Macroeconomic effects of monetary policies implemented by major central banks in struggle with the pandemic crisis

This study examines the macroeconomic effects of the monetary policies implemented by major central banks in combating the COVID-19 pandemic crisis, which began in March 2020. The aim of the study is to highlight the impact of these monetary policies on macroeconomic variables such as production, employment, unemployment, inflation, and national income. With the onset of the pandemic, healthcare expenditures increased, and budget deficits widened. In this context, to combat the pandemic crisis, governments implemented expansionary fiscal policies within their budget capacities, created fund support packages for those who lost their jobs, announced subsidies for closed businesses, and provided transfer aid to vulnerable groups suffering significant income losses. The U.S. government approved the CARES Act worth 2 trillion USD, Germany announced a 130 billion Euro aid package, China initially provided 245 billion USD in subsidies, and Spain announced a 39 billion Euro financial aid package. The pandemic crisis caused significant losses in global stock indices. U.S. stock markets experienced their sharpest weekly decline since the 2008-2009 global economic crisis. Within a week, the S&P 500 Index lost 11.5%, and the Dow Jones dropped by 12.4%. During the COVID-19 pandemic, new monetary policy tools, first used during the Mortgage Crisis, were utilized more extensively. Major central banks, including the U.S. Federal Reserve (FED), the European Central Bank (ECB), the Bank of Japan (BOJ), and the Bank of England (BoE), implemented expansionary monetary policies by purchasing assets, increasing the monetary base, and lowering policy interest rates to counter the economic downturn. As a result of the expansionary monetary policies employed by major central banks to combat the pandemic crisis, the negative effects of full and partial lockdowns on economic activities gradually diminished, growth and employment rates increased, national income began to recover, and unemployment rates fell. However, inflation rates also rose rapidly. The study examines and interprets interest rates, GDP growth rates, unemployment rates, inflation rates, current account deficit/GDP, and trade deficit/GDP ratios for the countries covered between 2019, the beginning of the COVID-19 pandemic crisis, and 2024. Using the case study method, the macroeconomic effects of the monetary policies implemented by major central banks during the pandemic crisis were analyzed. The findings indicate that the monetary policies implemented by major central banks to combat the pandemic crisis led to increases in production levels, supported employment and growth rates, reduced unemployment rates, and made positive contributions to the normalization of the economy. However, these policies initially exerted upward pressure on inflation rates. These policies were successful in combating the COVID-19 economic crisis. As economies began to reopen and macroeconomic indicators improved, starting in 2022, major central banks began implementing tighter monetary policies by raising policy interest rates to combat rising inflation, and by 2024, they had largely brought inflation under control. Keywords: Covid-19 Pandemic, Central Bank, Economic Crisis, Monetary Policy, Macro Economic Effects