MNI POLICY: ECB Aim Prevent Tighter Fnc'l Conditions: Makhlouf

     LONDON (MNI) - The European Central Bank's latest policy decision was in

part to prevent an "unwarranted tightening of financial conditions" with lending

to the real economy becoming constrained, Central Bank of Ireland Governor

Gabriel Makhlouf told a Market News International Connect event Thursday.

     Noting the sharp deterioration in the outlook for growth and inflation,

Makhlouf underlined that policy was set to maintain favourable financing

conditions "for all sectors of the economy and across countries.

     There was strong demand for credit given the significant liquidity issues

many firms face due to the pandemic and the Governing Council aimed at making

sure funds were able to flow through the system.

     Although acknowledging the downward pressure on prices, Makhlouf said the

overall inflation dynamic was ambiguous due to competing effects, "which could

cause inflation to increase or decrease."

     The downturn will result in substantial economic slack, which would tend to

weaken inflation dynamics, he said, noting that would be counterbalanced by

constrained supply chains which would tend to drive prices up.

     --BREXIT

     Makhlouf also looked at Brexit, highlighting the negative impact for both

the UK and Ireland if there was a 'no-deal' outcome to talks between London and

Brussels. 

     Exchange rates and financial markets could be affected, he said, adding

that in the long-run, Brexit is expected to have negative effects on the UK

economy through lower productivity and weaker investment. Slower UK growth

arising from these effects would also reduce overall demand for Irish exports,

he added.

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

[TOPICS: M$X$$$,MC$$$$,MT$$$$,M$$EC$]