The European Central Bank's chief economist has said the bank is keeping a close eye on the development of the coronavirus outbreak in China.  

Speaking at the European Financial Forum in Dublin Castle today, Professor Philip Lane said previous virus episodes typically have a short term impact on the economy. 

But the former Central Bank of Ireland governor added that they are usually followed by a significant bounce-back once the illness is contained, as cancelled and postponed spending plans resume. 

Mr Lane said commentary might suggest a revision in short-term forecasts as a result of the situation, but the overall impact over the course of the year could be relatively minor. 

He added that monetary policy works with a lag and so is not used to respond to shocks that are only temporary. 

"Compared to the SARS outbreak, China is such a big part of the world economy now, both in terms of as a source of demand and also as very important in various supply chains," he said.

"So I think it is a case now of every day lots of people at the ECB and across the eurosystem globally are keeping a very close eye on this," he said.

"Of course step one is not the central banks, step one is a public health issue, how to contain this virus and until that happens, the uncertainty will be elevated," the Professor added.