Financial Stability Review 2022 II

The world economy is slowing, with inflation having become more broad-based and persistent in the last six months. Global financial conditions have tightened amid a pronounced shift in monetary policy, exposing pockets of vulnerabilities. There is heightened uncertainty around the potential source of further shocks. Domestically, the ongoing energy crisis and wider price and real income pressures have led to a downgrade in growth forecasts and have increased downside risks. Households, businesses and banks are benefitting from the decade of prudent lending behaviour and the build-up in resilience that preceded this shock, providing capacity to absorb adverse outcomes. Consistent with previous guidance, the Counter-Cyclical Capital Buffer (CCyB) rate will increase to 1 per cent. It marks a further step towards the 1.5 per cent target rate for the CCyB in periods when cyclical risks are neither elevated nor subdued. Given the scale of the sector in Ireland and growing connections to the domestic economy, the Central Bank is introducing macroprudential measures for Irish property funds investing in Irish commercial property with limits on leverage and Guidance on liquidity timeframes.

See also:

• Previous Financial Stability Reviews
• Press Release on Financial Stability Review
• Opening Remarks by Governor Makhlouf FSR 2022 II
• FSR 2022: II Presentation