Tommy Broughan (Dublin Bay North, Independent)
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42. To ask the Minister for Finance his strategy and views on the impact on Ireland of the cessation of asset purchases by the European Central Bank and winding down of the quantitative easing programme; and if he will make a statement on the matter. [46257/18]

Paschal Donohoe (Dublin Central, Fine Gael)
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At its most recent meeting on 25 October 2018, the Governing Council of the European Central Bank (ECB) confirmed that it will continue to make net purchases under the Asset Purchase Programme (APP), also known as Quantitative Easing (QE), at the new pace of €15 billion per month until the end of 2018.

Subject to incoming data regarding the medium-term inflation outlook, the Governing Council expects that net purchases will then end.

However, the Governing Council intends to reinvest the principal payments from maturing securities purchased under the APP for an extended period of time post end-December 2018. The Governing Council also expects that key ECB interest rates will remain at their present levels at least through the summer of 2019.

While it is not possible to predict the future path of ECB monetary policy or interest rates, guidance from the Governing Council suggests that monetary policy is likely to remain accommodative for some time yet.

As part of its role the NTMA has been contemplating the end of QE since it commenced in March 2015. The strategy of the NTMA in recent years has been to take advantage of the favourable market conditions for sovereign issuers wherever possible. Since the start of 2015, it has issued €55 billion of Government bonds at a weighted average yield of 1.1% and with a weighted average maturity of over 13 years.

Through taking pre-emptive action – including the early repayment of IMF and Swedish and Danish bilateral loans, together with the early buyback and switching of near-term maturing bonds for longer maturity bonds – the NTMA has significantly improved our debt redemption profile and lowered our interest bill.

In addition, the accelerated buy-back and replacement of Floating Rate Notes from the Central Bank of Ireland also locks in current interest rates.

Furthermore, the NTMA continues to pre-fund ahead of larger bond redemptions in the coming years. It expects to end this year with over €13 billion in cash balances. Relative to other sovereigns, Ireland has been particularly pro-active in taking advantage of the highly accommodative interest rate environment of recent years in order to pre-fund.

These actions reduce refinancing risk for the Exchequer and offer insurance against the possibility of interest rate increases in the coming years.