THE Governor of the Central Bank, Gabriel Makhlouf, said that he thinks Irish banks are in a good position in terms of capital and have the capacity to lend more to developers for housing. The comments come in the wake of a series of reports in the Irish Independent around Government plans to facilitate less investment from developers and more borrowing.
Mr. Makhlouf said that while ‘many interventions’ have been made in the housing market already, he is keen to see housebuilding in Ireland increase at a higher rate. He also said that his ‘strong advice’ was to ‘take stock of all of those interventions [and] make sure they are mutually supportive of each other, before introducing new ones’.
Ultimately, ‘it's their commercial judgement’ if banks want to take the decision to lend more, which will also depend on their willingness to assume more risk. Mr. Makhlouf is scheduled to meet with Housing Minister James Browne in the coming weeks and months.
Meanwhile the Minister for Housing responded that the Government has been looking into all available measures for the rapid delivery of more housing. He said that while he recognised financial liquidity was an issue within the private sector, the Government would set about delivering €6.5 billion in capital funding for 2025.
Minister Browne also said that financing in Dublin city centre was ‘broken’, adding that there was a cognitive dissonance between perceptions of its health and the under-delivery of houses and apartments. He added that the burgeoning trade dispute between the United States and the EU was ‘extremely concerning’ and made an already complicated issue even harder to parse.
Mr. Makhlouf echoed these concerns, warning that Ireland could be facing into a period of ‘significant change and volatility’. The Central Bank Governor also said that the unpredictability of US financial foreign policy made the future health of the Irish economy difficult to forecast.
Mr. Makhlouf added that the European Central Bank should be sensible when it comes to making its next interest rate decision, with improving inflation no guarantee of a healthy global economy in the long-term.
“As far as inflation is concerned, a lot will depend on exactly what is done, and not just what is done by the people imposing tariffs, but what is done in response to those, and not just by the authorities and how they respond, but also how businesses decide to respond,” he said.
“They may decide to change their supply chains. How consumers respond. Consumers may choose that they’re not going to buy particular products because of the price, there’s a lot of uncertainty in that.
“I think the job that we have to do, certainly in merger policy, in terms of the European Central Bank (ECB), is just being extremely vigilant as to what’s going on, try and understand what’s going on, try not to speculate about what might happen, and make decisions on the basis of speculation.
“In terms of the economic impact on Ireland itself, I’ve seen the comments that the Minister for Finance has made in the last few days and the ESRI and the Department of Finance report. Our views are not inconsistent with those. We published our quarterly bulletin last week and basically gave a similar message.
“It is extremely concerning. My overall sense is that we’re living in a period of significant change, significant volatility, and the most important thing that we can do is keep a clear head, understand exactly what is happening, and then make a decision on how to respond and start talking about what our view is as to its impact,” the Governor said.
