Dublin: Central Bank Governor Gabriel Makhlouf says rates will continue to rise

The current phase of rising interest rates is not going to end any time soon, according to Central Bank Governor Gabriel Makhlouf.

Last month, the European Central Bank announced a 0.75% rate increase, the latest in a series of hikes, and is expected to announce further increases in the coming months.

"It's not going to end any time soon, but it will end and the important thing is that we get on top of inflation," Mr Makhlouf said.

"The reason interest rates are going up is because inflation needs to be brought down, the ECB's target is 2% over the medium term, we are clearly some way from that," he said.

We truly have no alternative but to get price stability as soon as we can, Mr. Makhlouf continued. "If we don't bring inflation under control, the medium-term challenges for us would be much lot worse."

Today in Dublin, at a symposium on the financial system, the governor of the central bank was speaking to media.

Additionally, he stated that since KBC and Ulster Bank are leaving the Irish market, more needs to be done to assist their consumers.

"The community as a whole needs to be doing more to ensure this happens in a smooth way," Mr. Makhlouf said. "The banks who are exiting the market, the banks who are inheriting the consumers, or likely to inherit the customers, and the banks who are inheriting the customers."

For clients who switch, "we would anticipate a greater quality of service," he continued.

Mr. Makhlouf demanded more regulation of the non-bank sector, which includes investment funds, money market funds, and special purpose firms, in his opening remarks at the conference today.

The head of the Central Bank of Ireland stated, "We cannot solve the larger issue alone. The Central Bank of Ireland is planning to implement leverage limitations for property funds tied to the domestic economy."

🗨️Officially opening the conference, Governor Makhlouf says good regulation depends on high-quality stakeholder engagement. His full remarks are available here https://t.co/XAOR5gHBKS
#FSCDublin2022 pic.twitter.com/4qYP6h9XSe
— Central Bank of Ireland (@centralbank_ie) November 2, 2022

"This situation calls for urgent global and European coordination," Mr. Makhlouf continued.

Today and tomorrow, more than 300 consumer advocates, business executives, and international policymakers will assemble in Dublin to discuss some of the major opportunities and difficulties facing the financial system, such as consumer protection, climate change, innovation, disruption, and regulation. 

The event's topic is "Supporting the Economy, Delivering for the Consumer," and speakers at the event include Paschal Donohoe, the Minister of Finance, Mairead McGuinness, the EU Commissioner, and François Villeroy de Galhau, the Governor of the Banque de France.

The departures of Ulster Bank and KBC, according to Minister of Finance Paschal Donohoe, have brought to light the value of collaboration among all financial system participants.

The two banks' exit from the Irish market, according to Mr. Donohoe, is regretful because it lowers consumer choice, but it was a commercial decision made by the firms involved.

But that doesn't mean they simply close shop and disappear, Mr. Donohoe said. "The whole process is being handled by a number of stakeholders who are coordinating on a regular basis."

The Minister added that he anticipates receiving a draught report on the examination of the retail banking industry he announced last year very soon.