The Central Bank has warned about the effects of global uncertainty caused by US tariffs and its potential impact on the Irish economy.

The Governor of the Central Bank Gabriel Makhlouf said: “There has already been some softening in consumer sentiment.”

Mr Makhlouf added the bank’s engagement with industry pointed to “cautiousness amongst companies, at least for now, in terms of new investments.”

He said any reduction in activity by US owned multinationals, particularly in pharmaceuticals and IT companies, could “affect employment, tax revenue and investment.”

He said tariffs will harm the US.

Retaliation by the EU as countermeasures to tariffs imposed by the Trump administration could impact inflation in Ireland, he added.

He was speaking as the Central Bank published its Financial Stability Review.

The Central Bank has decided not to change its rule regarding how much money banks have to set aside in financial buffers to deal with financial shocks, but added that risks to the economy had increased.

Gabriel Makhlouf also said the global growth outlook had weakened.

Mr Makhlouf said the global market volatility in April during US tariffs announcements led to higher liquidity demands for certain groups of investment funds based in Ireland.

The Central Bank also said today that foreign lending to property investment projects had fallen 80% between 2021 and last year.

But Mr Makhlouf said the bank had not yet analysed the announcement by the Government on rent pressure zones yesterday.

However, he said internationally rent controls had been shown to “affect the supply of housing”.

“We should pull every lever we have to increase the supply of housing,” he added.

Makhlouf says Gaza events ‘horrific’

The Governor of the Central Bank also said today that what is happening in Gaza is “horrific”.

Gabriel Makhlouf has come under political pressure from opposition parities who are critical of the bank’s authorisation of bonds issued by Israel.

Speaking to RTÉ, Mr Makhlouf said the pictures from Gaza “are horrific – it is unconscionable”.

But he said the Central Bank had to operate within the law.

“The conflict should be stopped and stopped now,” he added.

He said “the Central Bank cannot be driven by what if feels it has to be driven by what the law says.”

ECB interest rates in territory where they are likely to remain

European Central Bank interest rates are in the territory where they are likely to remain for the foreseeable future, but that does not mean a change in policy is off the table for the bank’s next meeting, Central Bank Governor Gabriel Makhlouf also said today. Mr Makhlouf is an ECB governing council member

“I certainly think we’re now in territory where we’re likely to remain in the foreseeable. Whether that means at the next meeting we decide not to move would really depend on the facts at the next meeting” in July, Mr Makhlouf said.

The Central Bank Governor said that policymakers need to be prudent and cautious with risks to euro zone economic growth to the downside and risks to inflation mixed due to uncertainty over where tariff policies will settle.

Article Source – Central Bank warns of impact of US tariffs on Irish economy – RTE

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