Oireachtas Joint and Select Committees

Wednesday, 24 November 2021

Committee on Budgetary Oversight

Inflation: Discussion (resumed)

Photo of Mairead FarrellMairead Farrell (Galway West, Sinn Fein)
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I thank the Chair and I also thank the witnesses for coming before the committee. I hope they are enjoying their first time before us. I am sure that they will be rushing to come back again.

I have a number of questions. I am quite interested in the comments made by the Governor in an article in The Irish Timestoday. They struck a somewhat different note from what we have heard from Philip Lane when it comes to the need for interest rate increases. I would like to tease that out with our witnesses if I may. It is something more of a hawkish position whereby Mr. Makhlouf said today that we should not hesitate to increase interest rates if inflation persists. I am interested because, from my understanding of this, we can see that current inflation is arising as a result of two main factors, one of which is energy prices. Much of that is due to the geopolitical factors in respect of Saudi Arabia and Russia reducing oil and gas supplies in their own interests. There is also the reopening of the supply chains that is currently under way. It will take time but it is happening nonetheless.

I am very interested in hearing the bank’s views as to how it feels that an interest rate rise could have an effect on those things. Would it not be worried in any sense that it could create risks and could stymie the recovery and potentially even create stagflation? I thank the Chair. That is my first question.