LONDON (Reuters) – The European Central Bank is “very worried” about the spread of the coronavirus, new ECB Executive Board member Isabel Schnabel said on Thursday.
“All of us are very worried about what is currently happening with respect to the spread of the coronavirus,” Schnabel said during a speech in London.
“We know that this is really raising uncertainty to a large degree, for the global growth outlook but of course also for the outlook for the euro area.”
“But what we really need to understand when we are doing monetary policy is what are the potential medium-term implications, and at the moment this is unclear.”
The coronavirus, which first emerged in China, flared up in northern Italy last week, increasing fears that a serious spread across the rest of Europe could push the region back towards recession.
Money markets have started pricing in another 10 basis point cut to the ECB’s already-negative interest rates by the end of the year.
Data on Thursday also showed that bank lending to euro zone companies was stuck at a two-year low last month, even before the virus worries had reached current levels.
The region has also struggled under the weight of a global trade war which has already caused a manufacturing recession.
(Reporting by David Milliken and Dhara Ranasinghe; Editing by Marc Jones and Peter Graff)
