ECB Governors Phone In for Crucial Meeting on Virus Concern

(Bloomberg) --

European Central Bank President Christine Lagarde’s policy meeting to address the coronavirus outbreak is being made trickier as the epidemic keeps some governors at home.

At least five central-bank heads will dial in by teleconference instead of traveling to Frankfurt this week. That includes the Bank of Italy’s Ignazio Visco, whose homeland became the first democratic country since World War II to announce a nationwide lockdown. The central banks of Latvia, Lithuania, Estonia and Portugal said their policy makers will also join the discussion remotely.

Some others haven’t yet decided whether to attend in person, according to people familiar with the matter.

The ECB itself reported its first case of coronavirus on Monday, and 100 colleagues who had worked in proximity with the member of staff will work from home temporarily.

The Governing Council’s two-day meeting starts Wednesday and is being closely watched by investors for a response to the outbreak, which has hit the economy by shutting down supply chains and disrupting travel. An oil-price war between Saudi Arabia and Russia has added to the tension and will put downward pressure on inflation, which is already well below the ECB’s target.

The gathering is typically a large affair, with 25 council members from 19 countries accompanied by deputies and advisers. After ECB staff presentations and a governors’ dinner on Wednesday, the proceedings culminate on Thursday with a session to take the policy decision, and a press conference by Lagarde.

An ECB spokesman said the meeting is scheduled to go ahead at the ECB’s main building, but governors can use the teleconference facility if they wish. The press briefing will follow a similar procedure, with journalists invited to listen in person or via a live stream.

Many policy makers are still planning to be physically present. The six Executive Board members are based in Frankfurt, as is Bundesbank President Jens Weidmann. Austrian Governor Robert Holzmann, Belgium’s Pierre Wunsch, Finland’s Olli Rehn, France’s Francois Villeroy de Galhau, Spain’s Pablo Hernandez de Cos and Ireland’s Gabriel Makhlouf said they’ll be there -- as of Tuesday afternoon.

Slovak central banker Peter Kazimir and his Dutch colleague Klaas Knot are also set to travel -- but will make their journeys by car rather than airplane. Greek Governor Yannis Stournaras arrived in Frankfurt on Tuesday.

Still, the physical absences threaten to complicate the process for what is already likely to be a tricky decision. While investors expect the key interest rate will be cut by at least 10 basis points from the current minus 0.5%, economists say that alone won’t address the economic problems caused by the coronavirus outbreak.

The ECB is also expected to consider measures to direct liquidity toward small and medium-sized companies suffering cashflow problems. That could include a boost to quantitative easing, especially corporate-bond purchases, and a program to help banks finance loans to SMEs.

--With assistance from Alessandro Speciale, Boris Groendahl, Aaron Eglitis, Milda Seputyte, Radoslav Tomek, Dara Doyle, Ott Ummelas and Kati Pohjanpalo.

To contact the reporters on this story: Paul Gordon in Frankfurt at pgordon6@bloomberg.net;Piotr Skolimowski in Frankfurt at pskolimowski@bloomberg.net

To contact the editors responsible for this story: Paul Gordon at pgordon6@bloomberg.net, Jana Randow, Brian Swint

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