Peadar Tóibín (Meath West, Aontú)
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149. To ask the Minister for Finance if his attention has been drawn to a prediction by the Central Bank Governor that interest rates will continue to rise; and if he will make a statement on the matter. [55584/22]

Paschal Donohoe (Dublin Central, Fine Gael)
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During the pandemic, central banks supported economies through expansionary monetary policy, with the ECB maintaining interest rates at record low levels - including a negative deposit rate – while also rapidly increasing its balance sheet through non-standard measures. This policy stance supported market liquidity and facilitated favourable financing conditions over the course of the crisis.

At the beginning of this year, the outlook for the euro area economy was positive. The fading impact of the pandemic represented a tailwind for economic activity, and the expectation was that monetary policy could be gradually normalised in line with the burgeoning economic recovery. However, Putin’s invasion of Ukraine and weaponisation of gas supplies has triggered an exceptionally large energy price shock and undermined global economic prospects. Inflationary pressures have increased rapidly and remained elevated over the last number of months, with the annual rate of inflation in October standing at 9.6 per cent.

The rise in inflationary pressures is not only a feature of the Irish economy but is one that has become evident across most advanced economies, with euro area inflation reaching a record 10.7 per cent in October. It is in this context that the process of monetary policy tightening in the euro area - and around the world - is underway.

The ECB has raised interest rates by a cumulative 2 percentage points this year, which compares to 3¾ percentage points by the US Federal Reserve and 2¾ percentage points by the Bank of England. Most recently at the end of October, the ECB’s Governing Council raised interest rates by 75 basis points and announced its expectation that further interest rate increases will be appropriate. This policy tightening is designed to ensure inflation stabilises at its 2 per cent goal over the medium term.

As Minister for Finance, monetary policy is not part of my remit and it is not appropriate for me to comment or speculate on future Eurozone interest rates, which as the Deputy is aware is the responsibility of the ECB. Of course, interest rates changes do have an impact on the economy and as such my Department will continue to closely monitor developments in this area, particularly the impacts on borrowing costs for households, firms and the public sector.