2023-04-30 12:25:41
Ireland has called on the European Central Bank to ease the pace of interest rate hikes ahead of its meeting next week. It drew attention to their “real” influence on ordinary people.
The ECB has raised interest rates by 3.5 percentage points since July last year as part of a tightening of monetary policy to bring high inflation under control.
Irish Finance Minister Michael McGrath called on the eurozone’s central bank to “consider the real impact of the decisions it takes on people” on Saturday during an informal lunch in Stockholm with his European Union (EU) colleagues and ECB chief Christine Lagarde.
He pointed to the fact that in Ireland some lenders charge very high interest rates, which puts pressure on ordinary households.
Increasing interest rates
Despite euro zone inflation falling to 6.9 percent in March after peaking at 10.6 percent last October, the ECB is expected to raise rates on Thursday as it targets inflation at two percent .
McGrath added that businesses also have a role to play, and “when producer prices go down, that needs to be passed on to consumers through price cuts.”
Experts have little doubt that the central bank will raise borrowing costs next week, for the seventh time in a row, as inflation remains well above its target level. However, analysts differ on how big the interest rate hike will be given the market turbulence.
There is debate over whether the ECB will raise interest rates by 50 basis points, as it has done at its previous three meetings, or by just 25 basis points.
Resistance to the energy crisis
Most analysts expect rather a smaller increase in interest rates due to slowing inflation as well as a stable outlook for the economy of the 20-member euro region. Data from last week showed the currency bloc’s economy grew by 0.1 percent quarter-on-quarter in the first quarter. Although this is only a very moderate growth, according to some politicians, it also points to the “resilience of the region in the difficult environment of the energy crisis”.
Don’t overlook
The growth of the Irish economy slowed sharply in the last quarter of last year
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