Central Bank governor Philip Lane steered a steady course through his first press conference since taking office in November, in succession to Patrick Honohan. Having delivered a supersized dividend to the exchequer, the governor brushed away questions as to whether public spending might be misdirected by a minority administration towards “suboptimal” local or regional projects. “The debate about the allocation of public spending and so on is really for the political classes to work on,” he said.
At issue on the technocratic side was compliance with fiscal targets in respect of deficit and debt targets. Choices made within those limits were for government to make. “It is not the bank’s place to replace the role.” He did call for fiscal discipline, however, and said discipline was also required of individuals, corporates and banks. No small thing, that.
On the morning after the Department of Finance said there more global uncertainty now than at any time since the height of the financial crisis, Prof Lane said Ireland was “especially vulnerable” to a slowdown in the global economy or tightening in international financial conditions. Concerns include the Brexit poll in June, which is under scrutiny within the central banking world. Dame Street is at one with the Bank of England in seeing plenty of risk in a Brexit, and the European Central Bank is on the case too.
Pro-Brexit campaigners in Britain say the threats are overblown for political reasons. This prompts the question of Prof Lane as to whether anyone in global central banking would demur from the bleak assessment. “I think you would see everywhere quite a strong consensus that any disruption to the current set-up, at the very least, creates uncertainty. Free trade and a strong EU for the wider European economy is very important.”
On the ECB's contentious quantitative easing campaign, he said the decision at the next meeting in June is "entirely going to be data driven". That's as you might expect, notwithstanding attacks on the bank from Berlin. As if to reinforce the point, ECB chief Mario Draghi (above) told Bild newspaper German criticism may undermine efforts to restore the inflation needed for higher interest rates.
