dimitar radev : eurozone slowdown likely temporary publication in the mni based on an interview with mr dimitar radev, governor of the bulgarian national bank, conducted by mr luke heighton and published on 17 may 2019. * * * the eurozone slowdown may prove temporary, the governor of the bulgarian national bank told mni, but whether europe emerges from the current soft patch by the second half of 2019 is uncertain. " the euro area ’ s economy beat many economists ’ expectations in the first quarter. but the pace and direction of the economy over the coming months and quarters are yet to be seen, ” said dimitar radev, a member of the european central bank ’ s general council since his 2015 appointment, noting the persistence of global trade tensions and “ political developments ” in europe. " recent data may be interpreted as signs that the region ’ s slowdown may be temporary, ” he said in an emailed response this week to questions. asked whether slow eurozone growth pointed to ‘ japanification ', he replied : “ comparisons with previous historical episodes and other economies do come to mind when we observe prolonged periods of slow growth, very low interest rates and aging population in europe. " " policy responses may be effective only as long as they target structural areas, such as education, labour market and pension reforms. the focus needs to remain clear : to stimulate productivity and competitiveness, ” he said, calling for more growth - oriented fiscal policies. " this does not necessarily mean higher spending. moreover, higher spending would be counterproductive in countries with no fiscal space. " — policy review radev, was circumspect regarding recent calls for a review of the ecb ’ s monetary policy strategy. he also expressed caution in response to suggestions the institution should lower its mandated medium - term inflation rate target from close to but below 2 % to around 1 %. " there may be reasons to start thinking if an overhaul needs to be considered, ” he said. but he added : “ whatever, if anything, the ecb decides in this regard should be shaped into a carefully communicated process. i cannot but fully agree with a recent comment by peter praet who warned that such public announcements may be misread and, furthermore, interpreted as the ecb admitting to having failed on its mandate, which is not the case. " the ecb has “ plenty of instruments ” at its disposal in the event of a severe economic down

investment activity is subdued. the central bank's judgement remains that the domestic banking system is resilient to this downturn. in residential housing, an ongoing deficit in supply continues to drive prices domestically, and around 52, 000 new homes per annum could be needed to meet demand. despite these imbalances, there are no signs of excessive risk taking in mortgage credit, while aggregate mortgage credit growth remains moderate. more broadly, the irish economy is growing strongly and modified domestic demand is expected to grow in 2024 and 2025 at a faster pace than at the time of the last review. however as international investment and multinational enterprises ( mnes ) are central 1 / 2 bis - central bankers'speeches to the domestic economic model, driving a significant share of growth, public finances and employment, ireland is particularly exposed to global developments at a time of increased geopolitical and geoeconomic risk. moreover, with an economy performing at or above capacity, expansionary fiscal policy risks aggravating domestic pressures. irish households and businesses have been supported by a growing economy, but are also exposed to global shocks. households have weathered the period of higher interest rates, with the amount of income spent on debt repayments remaining stable. this follows a substantial decline in interest expenses in the decade after the global financial crisis ( gfc ). however, a shock to international trade could have knock - on effects for the labour market here, as well as the performance of domestic firms. irish small and medium - sized enterprises ( smes ) have shown resilience, but there are pockets of risk, for example with insolvencies rising in the accommodation / food and other services sectors although we have continued to observe employment growth in these sectors. domestic bank profitability has likely reached its cyclical peak, following strong growth over the last couple of years. however the banking sector is resilient and is well - placed to withstand any softening in profits. against this backdrop, we are maintaining an unchanged policy stance for macroprudential capital buffers. the counter - cyclical capital buffer ( ccyb ) rate remains at 1. 5 per cent. the central bank's mortgage measures aim to ensure sustainable lending standards and evidence suggests the measures continue to meet their objectives. recent developments in new mortgage lending show a shift towards lti and ltv limits, but the share of new lending in the most risky categories is contained. borrowing levels relative to incomes continue to be materially lower than in the early