Makhlouf says Philip Lane would be ‘great’ candidate to succeed Lagarde

Central Bank governor Gabriel Makhlouf said he believes ECB chief economist Philip Lane would be a “great” candidate to succeed Christine Lagarde as president of the European Central Bank (ECB).“I think Philip would be great but I don’t know whether legally doing a further term on the executive board is possible,” he said.Lane’s term as chief economist expires in May.“I think Ireland should support the best candidate,” Makhlouf told reporters at a finance conference in Croke Park on Monday.READ MORELagarde announced last week she intended to leave her post next February, nine months before her term ends, triggering a succession race with former Dutch and Spanish central bank governors Klaas Knot and Pablo Hernández de Cos seen as the front-runners.Lagarde’s decision to step down early came as ECB policymakers held interest rates steady despite the pickup in headline inflation from higher energy prices.Makhlouf said he “seriously considered” supporting a rate hike but decided based on the evidence “holding was the right thing”.“I made that decision for last week based on what I saw in the numbers last week,” he said.“We live in very, very uncertain times, exceptionally uncertain times, and we have got to keep a very close eye on the evidence in the data,” Makhlouf said.With markets predicting another quarter-point ECB rate increase in December, Makhlouf reiterated the bank’s mantra that decisions would be made on a meeting-by-meeting basis, based on the data.The impact of US midterm elections on global financial stability was difficult to predict, he said, and would depend on the outcome of the elections.In his address to the conference, Makhlouf warned an equity price correction relating to supercharged AI valuations would not be a “surprise”.“The US is where the market correction would start,” he said.“The important thing for us is to really understand the transmission channels that would transmit whatever shock happened in the US,” he said.Makhlouf also said the Government should be saving more of Ireland’s corporate tax windfall in its two wealth funds.“I think putting more into them would be a good thing,” he said.“What the funds have been set up for are the cost of transitions that are definitely coming; they are not speculative,” the governor said.“Demographic change and climate change are definitely going to impact the economy,” he said.The Irish Fiscal Advisory Council has warned the Government is planning to spend up to 90 per cent of expected receipts from corporate tax over the next five years.Makhlouf said using this revenue to support current spending was risky given the concentration risk.Approximately half of last year’s €33 billion corporate tax haul came from just three companies.