Honohan: Deflation not a risk

CENTRAL Bank chief Patrick Honohan has said Ireland is not in any danger of being sucked into a sustained period of deflation through its membership of the eurozone.

Speaking in an interview with the Daily Telegraph, Professor Honohan — who recently claimed the Irish economy should grow (in GDP terms) by 0.8% this year and by 2.8% in 2011 — said the country is “at no risk of being pushed head over tail downwards by the discipline of EMU membership”.

The combined eurozone went from inflation to deflation in June, for the first time since the introduction of the single currency 11 years ago, and many analysts feel it is just the beginning of a sustained period of deflation.