• Another round of lockdowns in Europe and sharp increase in Covid-19 cases in United States (US) threaten the momentum in economic recovery gained in the third quarter (Q3)
  
• Major central banks of advanced economies kept policy rates unchanged in October
  
• The energy index rose slightly even as crude oil prices declined
  

Even as the world is focused on the progress made in developing a Covid-19 vaccine, the pandemic refuses to abate in many parts. A second wave of infections has prompted renewed lockdowns and containment measures in most of Europe. The US too is seeing a record increase in cases. This is likely to hobble the recovery across economies, which were anyway seeing a slowdown in momentum starting September.

Overall though Q3 gross domestic product (GDP) numbers for major advanced economies have surprised on the upside, supported by private consumption and government spending. In October, there were improvements in macroeconomic indicators across economies, evidenced by gains in employment and Purchasing Managers’ Index numbers. On the monetary policy side, major central banks kept policy rates unchanged, and did not announce new stimulus measures, opting for a wait-and-watch approach to the Covid-19 curve. However, they continued their accommodative monetary stance, keeping open options for further action. And while early trials of different vaccine candidates have been encouraging, it remains to be seen how the approval of a vaccine and its distribution affect the trajectory of the global economy.