More Time Needed for Coronavirus Assessment, BOE’s Carney Says

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(Bloomberg) -- More time will be needed to see how the coronavirus will impact the world economy, Bank of England Governor Mark Carney said.

“This is a fast-moving issue,” Carney told reporters at a press conference in London after the central bank’s interest-rate announcement. “I don’t want to speculate in terms of orders of magnitude of impact on global activity and the blowback to the U.K., but it’s something we will be looking at very closely.”

The outbreak in China has rattled financial markets as investors assess how much it will hurt the economy. In the minutes of their meeting, BOE officials noted that asset prices have “responded significantly.”

The BOE’s remarks come after a warning by Federal Reserve Chairman Jerome Powell, who said on Wednesday that the disease will likely hit the Chinese economy and could weigh on the outlook for global growth.

In 2003, the SARS virus hit the Chinese economy hard, slowing growth with the downturn most noticeable in the services sector. But wider fallout was limited because the country’s weight in global growth at that time was just 4% of global GDP. Today it’s 17%, potentially boosting harmful spillovers.

The World Health Organization is gathering Thursday to consider issuing a health emergency. The death toll rose to 170 and confirmed cases in China soared past 7,700, and the outbreak spread to India and the Philippines for the first time.

©2020 Bloomberg L.P.

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