Robert Besser
26 Mar 2025

DUBLIN, Ireland: As tensions rise between the United States and the European Union over potential tariffs, Ireland's Central Bank governor has warned of deep uncertainty ahead, calling the situation "extremely concerning" for Ireland's economy.

Speaking this week, Gabriel Makhlouf said Ireland is navigating a period of "significant change and volatility," with global events making economic forecasting increasingly difficult.

"The reality, of course, is that we are living in a time of extreme uncertainty, so forecasting is a particular challenge," he said.

Makhlouf declined to speculate on the specific impact of U.S. tariffs but said the Central Bank's outlook aligns with recent findings from the Department of Finance and the Economic and Social Research Institute (ESRI). That joint report projected that a major transatlantic trade dispute could drive up prices, limit job creation, and slow economic growth.

"I have 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," Makhlouf said. "It is extremely concerning."

He also warned that the broader effects of tariffs would depend not just on those imposing them but on how governments, businesses, and consumers respond.

"They may decide to change their supply chains. Consumers may choose that they are not going to buy particular products because of the price — there is a lot of uncertainty in that," he said.

Makhlouf stressed that the European Central Bank (ECB), where he serves as a policymaker, must proceed carefully in the months ahead. While inflation is heading in the right direction, he said, it's not yet time to assume rate cuts are guaranteed.

"I wouldn't put too much weight on [timing]. The important thing is, two percent is what we're aiming for," he said. "We do… need to be pretty prudent and pretty cautious about changes to our monetary policy stance when we are not yet at target and when quite exceptional events are happening around the world."

"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," he added.