Central Bank governor Makhlouf to be reappointed for second term

The Government has decided to nominate Central Bank governor Gabriel Makhlouf for a second term, following heightened speculation in recent times over whether he would seek to open a competition to find a new head of the authority.

The Department of Finance confirmed that the Government officially nominated Makhlouf, on foot of a proposal from Minister for Finance Simon Harris, for another seven-year term at midday on Tuesday, shortly after The Irish Times first reported the development.

The appointment must technically be made by the President, Catherine Connolly.

“I am pleased to announce the Government has agreed to nominate Mr Gabriel Maklhouf for reappointment as Governor of the Central Bank of Ireland,” said Harris. “Mr Makhlouf is eminently qualified to perform the role of Governor of the Central Bank and the Government was pleased to support his nomination for reappointment.”

Makhlouf is the first Central Bank governor to be reappointed since former incumbent John Hurley in March 2009, before retiring later that year and succeeded by Patrick Honohan.

There has been degree of speculation in recent months in both political and regulatory circles about whether Makhlouf (66) wanted a second term – or whether Harris might take an opportunity to appoint an individual to lead the bank.

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Officials at the department said in a briefing note to Harris, shortly after his appointment in November, that in the event he did not plan to nominate Makhlouf for another term, a recruitment process would have to be concluded by June, before Ireland begins its European Union presidency.

The reappointment also for continuity on Ireland’s permanent seat on the European Central Bank (ECB) governing council as central bankers globally weigh the impact of the Middle East military conflict, which erupted over the weekend, on inflation and the wider economy

ECB chief economist and former Central Bank governor Philip Lane warned in an interview published on Tuesday that prolonged war in the Middle East and a fall in oil and gas supplies could cause a “substantial spike” in inflation, and a “sharp drop in output” in the euro zone.

For now, Lane said he did not see any reason for the ECB to change its benchmark deposit rate of 2 per cent, saying: “I think where we are now is okay.” That rate has been on hold since June last year, following a series of reductions over 12 months from a peak of 4 per cent.

Makhlouf, born in Egypt to a Cypriot-British father and Greek-Armenian mother, has sought to modernise and streamline the Central Bank’s regulatory and supervisory approach in recent years, making engagement with firms more transparent, consistent and predictable.

This follows criticism from financial firms – and questions from the Central Bank commission, or board, according to meeting minutes from 2022 – about a perception that securing regulatory approvals in the Republic was more difficult than in other countries in the wake of the great financial crisis.

The Central Bank also introduced senior executive accountability rules during Makhlouf’s first term. He is also credited with moving quickly to address shortcomings in the regulator’s own vetting process for candidates for senior roles in financial sector that were exposed in early 2024.

The Irish Financial Services Appeals Tribunal (Ifsat), an independent body that hears appeals from aggrieved parties against certain central bank decisions, said in February that year that the regulator’s decision-making process in a particular case was “flawed” and the appellant was “denied fair procedures at every stage” – precipitating a review of the regime.

However, the Central Bank also faced criticism from certain quarters during Makhlouf’s first term for not pushing insurers quickly enough to settle business interruption claims stemming from Covid-19 lockdowns, or protecting so-called mortgage prisoners, whose loans were acquired by investment firms during the arrears crisis, from outsized spikes in interest rates following the pandemic.

“During his first term, Mr. Makhlouf introduced reforms and enhancements that have strengthened the Central Bank and will continue to positively impact its performance,” said Harris. “I wish him every success as he continues to lead the organisation in the years ahead.”