Coronavirus: ECB plays down virus threat

ECB president Christine Lagarde has said officials are watching closely the spread of the coronavirus but don’t currently see the need for a monetary-policy response.

The ECB's policymakers are monitoring the situation “very carefully” though they don’t yet judge that the outbreak will have a lasting impact on inflation, Ms Lagarde said.

Echoing that view, ECB vice president Luis de Guindos said that it’s “important not to overreact.”

The central bank will have to determine if it will be a “long-lasting shock” affecting supply and demand as well as price growth, Ms Lagarde said.

The next chance for officials to make that assessment is in two weeks at the ECB's governing council’s policy gathering, where officials will be presented with updated projections for growth and inflation.

In its last forecast round in December, the ECB expected the eurozone economy to recover in the course of 2020. Ms Lagarde said the central bank’s base-case scenario still assumes a virus “containment in reasonably short order.”

“I was very pleased to see that the numbers in China on deaths relative to contagion seem to have declined for the third or fourth day, which seems to indicate that there is a degree of improvement,” she said.