Gerald Nash (Louth, Labour)
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64. To ask the Minister for Finance if he formally enunciated his concerns at the ECB's policy of continuing to increase interest rates and the impact of this policy on households and businesses at the recent meeting of finance ministers and ECB officials in Stockholm in late April 2023; if this is the official position of the Government; and if he will make a statement on the matter. [21441/23]

Michael McGrath (Cork South Central, Fianna Fail)
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Given the broad-based nature of inflationary pressures last year, central banks have, by necessity, rapidly tightened monetary policy. Price stability is a cornerstone of macroeconomic stability. With the further ¼ point rate rise announced last Thursday, the ECB has now increased interest rates by 3¾ percentage points since July.

Although necessary to avoid inflationary pressures becoming entrenched, the sudden rise in interest rates has increased the cost of capital and debt service costs for both households and businesses. This has made it more costly for households and businesses to borrow and invest. In addition, the rising cost of borrowing also applies to the Government.

At end-April 2023, I attended the Informal Meeting of Economic and Finance Ministers, hosted by the Swedish Presidency. Among the items for discussion was one that focused on national experiences with managing the challenges in addressing rising costs for households and businesses. Rising costs are something that are on the minds of ministers right across Europe and we considered appropriate fiscal policy measures and what can be done beyond budgetary supports for households and businesses, while seeking to ensure fiscal actions do not worsen existing and emerging inflationary pressures.

As Minister for Finance, monetary policy is not a part of my remit and, in the euro area, is the responsibility of the Governing Council of the ECB.

Instead, Government has focussed on providing timely and targeted fiscal supports to households and businesses most in need to support them through the period of high inflation. To date, a total of €12 billion has now been provided in direct relief to absorb some of the impact and ease the burden of inflation on households and businesses.

I am encouraged that inflation appears to have passed its peak and is on a downward trajectory. Indeed we have seen a near 2 percentage point fall in the inflation rate since February. As set out in the Stability Programme Update in April, my Department expects inflation to continue to ease over the course of the year, averaging 4.9 per cent for the year as a whole. For next year headline inflation is expected to moderate further to 2.5 per cent.