March 2, 2020 / 2:58 PM / a month ago

ECB should not have to act on every shock: Wunsch

FRANKFURT (Reuters) - The European Central Bank should not have to act on every negative shock but the coronavirus outbreak requires vigilance as it could derail growth, Belgian central bank chief Pierre Wunsch was quoted as saying on Monday.

“If there is a risk of a recession, we must do everything possible,” Wunsch, who sits on the ECB’s rate-setting Governing Council told German newspaper Boersen-Zeitung. “But you also don’t have to act on every negative shock once your forward guidance is properly interpreted by the markets.”

“My plea, however, is that we should not rush to fire our remaining fiscal ammunition. The euro economy is not in recession and jobs are still being created,” Wunsch said in an interview.

Wunsch said that easy ECB policy is already supporting growth and low borrowing costs provide room for governments to spend more.

He added that even if the coronavirus outbreak dragged euro zone growth lower, he expected the bloc’s recovery to be delayed by a quarter or two.

Reporting by Balazs Koranyi; Editing by Toby Chopra

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