Irish Finance Minister Michael McGrath has urged the European Central Bank (ECB) to moderate interest rate increases ahead of next week’s decision, highlighting their impact on people’s lives. Since July, the ECB has raised rates by 3.5 percentage points in an unprecedented effort to control inflation. McGrath has pointed to the growing pressure on homeowners in Ireland, whose interest rates have soared, and called on the ECB to take into account the impact of the decisions it makes on people’s real lives.
The ECB is scheduled to raise rates on Thursday despite falling inflation in the eurozone after peaking at 10.6% in October. In March, consumer prices in the eurozone rose 6.9% y/y, far short of the ECB’s 2% target. McGrath has said that businesses also play an important role and stressed that “where prices are falling, we should see the benefit of those reductions being passed on to consumers through price reductions.”
Ireland’s finance minister discussed the issue with his EU counterparts and ECB head Christine Lagarde during an informal lunch in Stockholm on Friday, describing it as “particularly open and frank.” McGrath has also pointed out that the non-bank sector in Ireland has seen very high interest rates charged by some lenders, putting pressure on ordinary households.
In short, the Irish finance minister has called on the ECB to take into account the impact of its decisions on people’s real lives before raising interest rates next week. Despite falling inflation in the eurozone, the ECB is expected to raise rates on Thursday, and McGrath has highlighted the pressure on homeowners and ordinary households due to rising interest rates. He has also stressed the importance of businesses reducing prices and passing on the benefits to consumers.
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