The Central Bank’s 2025 Annual Report & Annual Performance Statement

We published our latest Annual Report and Annual Performance Statement today. As always, it’s an important moment each year when we set out how we have delivered on our mandate for the people of Ireland.

I would like to use this blog to give an overview of the economic outlook, summarise our achievements and provide an update on our financial position at the end of last year. 

Economic outlook

Looking back on 2025, the global environment continued to be shaped by uncertainty, fragmentation and geopolitical tensions. Inflation continued to moderate across advanced economies, but the external environment remained challenging. At the same time, familiar longer-term transitions – technological, demographic, climate-related –  continued to reshape economies and financial systems.

The Irish economy demonstrated resilience in 2025, with solid growth supported by strong investment and high employment. As set out in our Quarterly Bulletin earlier this year, modified domestic demand grew by around 5 per cent in 2025. However, the outlook has become more uncertain, with growth expected to slow over the coming years as momentum outside multinational-dominated sectors eases and as global developments weigh on activity.

Recent developments in the Middle East have added further uncertainty. Higher oil and gas prices are expected to lead to lower growth and higher inflation than previously anticipated. Our Quarterly Bulletin noted that futures markets were pricing oil around 30 per cent higher and gas almost 60 per cent higher for 2026 than at the time of the previous Bulletin (in mid-December last year). That shock is expected to push inflation higher, to 2.9 per cent in 2026 and 2.6 per cent in 2027, with more severe outcomes possible if energy supplies are further disrupted.

Together with my colleagues on the ECB Governing Council, we continued during 2025 to take the decisions necessary to ensure that inflation returns sustainably to our medium-term target of 2 per cent. As inflation moved closer to target, we reduced interest rates further during the year, while remaining data-dependent and alert to risks around the inflation outlook.

As I discussed in a recent speech , policymakers are increasingly operating in a world characterised by geoeconomic fragmentation and heightened uncertainty, where supply shocks can affect both inflation and economic activity. For a small, highly open economy such as Ireland, it reinforces the importance of building resilience across the economy, public finances and financial system.

The Central Bank in 2025

Against this backdrop, the Central Bank continued to deliver across its mandate. Over the course of 2025, we published a revised Consumer Protection Code (following a comprehensive review of the existing framework), continued to develop our Innovation Sandbox programme and took on new statutory responsibilities to safeguard access to cash across Ireland. We also undertook analytical work on the implications of the evolving global trade environment (and the impact of US tariffs on the Irish economy) and continued to strengthen our supervisory frameworks. We published a roadmap to deliver a more effective and efficient approach to regulation and supervision, reducing unnecessary complexity and improving clarity while maintaining resilience and important protections.

Financial Performance

Notwithstanding the fact that the Central Bank recorded a loss of €104.6 million last year, our financial position remains robust. As in recent years, the losses reflect the use of the Central Bank’s balance sheet as a tool for monetary policy (to deliver our mandate to safeguard price stability).

As I have said previously, the role of a central bank is not to maximise profits but to serve the public interest by maintaining monetary and financial stability. The losses being experienced across the Eurosystem are a consequence of the policy actions taken in recent years to respond to exceptionally low inflation, the pandemic and the inflation shock that followed Russia’s invasion of Ukraine. The Central Bank remains financially strong and well-positioned to continue delivering on its mandate. (Last year’s losses are covered by reserves which have been built up to manage such circumstances.

Conclusion

Our Annual Report outlines the priorities that will guide our work in the year ahead, including maintaining resilience to macro-financial and geopolitical risks, securing consumer and investor interests and responding to technology-driven transformation.

In a period of continued uncertainty and change, maintaining trust and confidence in the financial system remains critically important. As we look ahead, the Central Bank will continue to adapt to a changing environment while remaining focused on delivering on our mandate in the public interest. 

Gabriel Makhlouf

See also: Central Bank publishes Annual Report and Annual Performance Statement 2025