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European Union (EU) Economic Commissioner Paolo Gentiloni noted that they are seeing the materialization of downside risks but added it was still too soon to measure the impact of the coronavirus outbreak on the economy. 

Gentiloni further noted that the ‘V-shaped recovery’ forecast presented a couple of weeks ago could not be taken for granted and acknowledged that this expectation is “optimistic.”

“We will assess requests for fiscal flexibility under the EU rules due to coronavirus outbreak,” Gentiloni added. “The EU is ready to use all policy options to safeguard growth against risks from coronavirus.”

Market reaction

Markets remain risk-averse following these comments with the 10-year US Treasury bond yield erasing more than 8% and the Euro Stoxx 50 and Germany’s DAX indexes both losing 0.5%.