Professor Michael McMahon:

Following on from the last answer I gave, in aggregate, monetary policy has its role to play but, ideally, supported by a fiscal policy that at least points in the same direction. Again, within that we can still redistribute and target with fiscal measures, but as a broad approach it works well. In terms of knowing how long this will last, we do not know how long it will last but we know that if we try to have fiscal policy act against monetary policy, it will last longer. That is not so much the case for Ireland because we will have rates set by the ECB. We could have a situation where rates have come down because every other country has lower inflation, but then we would just have higher inflation for longer. A general advice of the increase in interest rates is tougher.

One thing that I would certainly be asking a lot of questions about is this: we always mention the effect of the interest rate rise on mortgagors or borrowers but it also should have a beneficial effect on those who have assets. That tends to help older generations who tend to have less debt and to have savings assets, often in very safe vehicles. They should, on net, get some gain. For that to happen, it needs the deposit rates also to go up in line with the lending rates, which often happens more slowly and at a slightly differential rate. That is a way to take heat out of the economy in the aggregate. That would be my view of the best approach to take.