Kathleen Lynch (Cork North Central, Labour)
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Question 49: To ask the Minister for Finance his views on whether welfare recipients have a higher marginal propensity to consume than persons on higher incomes and that cutting welfare rates would thus more severely impact on demand within the economy than other expenditure cuts; his further views on whether welfare dependants are less likely to have benefited from falling interest rates than those on higher incomes and that the HICP measure of inflation is therefore more appropriate than the CPI measure in determining their changing cost of living; if he will commit to maintaining welfare rates in budget 2010; and if he will make a statement on the matter. [27958/09]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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It is generally acknowledged that as income levels rise, the marginal propensity to consume declines. Therefore, I would tend to agree that the marginal propensity to consume of welfare recipients is higher than for those on higher incomes. However, the overall impact on aggregate demand is far less certain given the high degree of import intensity in Ireland.

As I have pointed on many occasions, expenditure adjustments are required in order to maintain the public finances on a sustainable path, as we are currently borrowing €214 million per week to fund the gap between day to day spending from day-to-day revenues. In terms of the specifics, announcements will be made in the context of the Budget, and I will not comment on the relative merits or otherwise of the various approaches at this stage.

In terms of the appropriate price index, interest rates go up as well as down. So while mortgage holders have benefited more than non-mortgage holders from the recent reductions in interest rates, the opposite was the case in the past. Reductions in interest rates have a beneficial effect on the disposable income of all those facing extra pressures at this time. ^^ Banking Sector. ^^

Dan Neville (Limerick West, Fine Gael)
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Question 50: To ask the Minister for Finance if he is monitoring charges made to bank customers over inter-bank rates set by the European Central Bank; and if he will make a statement on the matter. [27942/09]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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The decision on pass through of ECB rate reductions to variable rate mortgages is a commercial decision for the financial institution concerned. This decision will reflect a range of different factors including funding costs, market conditions, profitability and business strategy as well as the competitive environment overall. The Deputy will appreciate it is a core function of the Board and senior management of each institution to assess where the appropriate balance lies between these competing objectives particularly in ensuring the financial health and commercial viability of the relevant institution. It is not an appropriate role for the Minister for Finance to seek to determine this decision making by financial institutions operating under competitive market conditions.

In view of its statutory consumer protection mandate, the Financial Regulator will continue to monitor interest rates charged by financial institutions.