Business Irish

Sunday 17 December 2017

Honohan defies the merchants of doom

Central Bank governor Patrick Honohan. Photo: Bloomberg News
Central Bank governor Patrick Honohan. Photo: Bloomberg News

Thomas Molloy

CENTRAL Bank governor Patrick Honohan has spoken out in support of the Government's economic policies by dismissing experts who believe Ireland and the euro are in deep trouble.

"Doomsday discussions are actually beside the point because governments have committed themselves to viable fiscal plans," Professor Honohan said yesterday.

The comments come days after University College Dublin economics professor Morgan Kelly said it was only a matter of time before the country goes bust.

Prof Honohan's comments are the first public endorsement of government policy for some time.

Prof Honohan added that he thinks the euro area is "safe" and he expects it to continue to expand. "I don't have any doubt in my mind that the euro and the euro area are permanent features of the landscape," he said. "The euro will continue to have an even growing membership of countries."

So far, investors seem unconvinced by the efforts of the European Central Bank and European governments to solve the continent's problems.

The euro has slumped 14pc against the dollar this year.

"It's not surprising that markets would react in this way and I suppose without necessarily endorsing exactly what the market is doing, one has to be realistic," Prof Honohan said.

Prof Honohan also weighed into the debate raging within the ECB over the bank's decision to buy government bonds, saying it could be an "important" new weapon in the bank's armoury and that any risks associated with the policy were being managed.

Irish Independent

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