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LAST UPDATE | 4 May 2023
THE EUROPEAN CENTRAL Bank has raised interest rates by 0.25 percentage points to fight inflation but at a slower pace, as higher borrowing costs take their toll and banking sector fears resurface.
The institution has lifted rates at an unprecedented pace since last year to combat spiralling energy and food costs. Today’s announcement is the seventh increase in a row.
ECB president Christine Lagarde said today: “The inflation outlook continues to be too high for too long.
“Headline inflation has declined over recent months, but underlying price pressures remain strong,” she said.
She said the ECB has “more ground to cover” in fighting sky-high inflation.
“Based on the information today, we have more ground to cover and we’re not pausing,” she told a press conference.
“Inflation is still being pushed up by the gradual pass through of past energy cost increases and supply bottlenecks.”
Lagarde said that the Euro area economy grew by 0.1% in the first quarter of 2023. She said that “easing of supply bottlenecks” and support for businesses and households have contributed to the “resilience” of the Euro economy, but “private domestic demand, especially consumption, is likely to remain weak”.
She added that pent-up demand from the re-opening of the economy after the Covid-19 lockdown was another factor in the rising inflation.
“Russia’s war against Ukraine also continues to be a significant downside risk to the economy.”
“However, the recent reversal of past adverse supply shocks, if sustained, could spur confidence and support higher growth than currently expected.”
The ECB is aiming to return inflation to 2% in the medium term.
President @Lagarde has just presented the Governing Council’s monetary policy statement.
— European Central Bank (@ecb) May 4, 2023
Read the statement https://t.co/KEBoN7eXwi pic.twitter.com/uY32cUhMe3
With the latest increase, mortgage repayments for customers on tracker mortgages will increase, while it is not clear if banks will increase variable-rate mortgages.
Bank of Ireland has confirmed that tracker mortgage rates will increase for all tracker mortgage customers by 0.25%.
The bank said that this change will take effect from 24 May 2023 for most customers. Customers will be contacted about the increase and they do not need to do anything now.
It said: “The Bank continues to keep all rates under ongoing review and will clearly communicate any future rate change decisions at the appropriate time.”
Martina Hennessy, the managing director of mortgage broker doddl.ie, said the increase was a blow to tracker-mortgage holders.
She said: “The latest rate increase marks another blow to tracker mortgage holders, who have seen their repayments rise by a total of €187 per month for every €100,000 owed since the upward trend in rates began in July last year.
“That’s a massive €6,400 for the average mortgage of €285,000.
“While some tracker mortgage holders face a dilemma of whether to forsake their tracker and lock in a fixed rate, many are opting for the security of fixed rates, which are now at levels lower than their tracker rates.”
Trevor Grant, the chairperson of the Association of Irish Mortgage Advisors, said: “This is the seventh increase since last July and could be the straw that breaks the camel’s back for many borrowers, adding significant financial stress.
“It could push more borrowers into mortgage arrears.”
Consumer prices in the 20 countries using the euro currency jumped 7% in April compared to last year, slightly down from the annual rate of 6.9% in March, according to EU statistics agency Eurostat.
Food prices eased a little, falling to an annual 13.6% from March’s 15.5%, while energy prices rose 2.5%.
When asked whether the worst of food inflation was over, Lagarde said: “We have seen it go down, if you compare March and April numbers … profit last year, in particular, contributed to inflation.
She said rising wages was also a factor.
We would hope that through a good social contract, these drivers of inflation do not activate each other.
Core inflation, which excludes volatile food and fuel, slowed slightly but was still high at 5.6%, underlining the expectation that the ECB will press ahead with its campaign to beat inflation into submission with rate hikes.
Economists say those are partly statistical quirks due the fact that lower figures from before the current outbreak of inflation have aged out of the annual comparison, known as a base effect.
Speaking in the Dáil today, Sinn Féin’s Pearse Doherty criticised Tánaiste Micheál Martin for allegedly failing to support people who will have their mortgages affected by today’s announcement.
“Hundreds of thousands of families are going to hear in the next hour or so that their mortgages are going up and they just listened to you and they’ve heard nothing in relation to direct support from yourself.”
“You, as leader of the party, are still not saying that you’re wanting to intervene and provide direct support for mortgage holders. And that’s a crazy situation. We have a situation where people are paying already 8% interest rates, and that will go up,” Doherty said.
“We are asking for direct intervention in relation to mortgage holders. We’re asking for a response that is time limited and that is targeted. We have put our proposals on the table as far back as last year, you just are coming up with nothing.”
Martin fired back that Sinn Féin didn’t address interest rates in their budget submission last autumn despite the fact that the ECB had already raised rates twice at the time.
He said that there was a “strategic approach by government to reduce costs generally for households, including those with mortgages”.
“We’ve reduced the cost of public services and health in terms of admission charges to hospitals, inpatient charges and in terms of education.”
“Our measures and interventions have been far more excessive, more comprehensive, more strategic and sustained than anything you proposed.”
Additional reporting by Emer Moreau and AFP
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The winter vomiting bug (norovirus) had been around for some time now. What I cannot understand is Joe public visiting hospitals despite requests not to. Next of kin of course must visit. I’ve seen so much recently of aquatinted people and neighbors …. we can only stop infection by following requests of medical experts.
You get people going to A&E that really don’t need to be there.. the minor injuries clinic will sort you out for things like sprains, stitches, and minor fractures. A&E should be for medical emergencies like serious fractures, head injuries, spinal injuries, cardiac and respiratory problems. If you go to A&E with the sniffles or a minor injury, you are part of the problem in the Irish Health Service. If it’s serious enough, you’ll be referred from your GP or the minor injury clinic or the swift care clinics. They may even get you a spin in an ambulance.
@David: It’s not always practical. Minor injury clinics don’t operate 24/7. The one in Smithfield for example is 8-6 excluding weekends and bank holidays.
Go to the equivalent of SouthDoc then. Get your referral letter, if required, it’ll save you money as you won’t pay the A&E fee, provide reassurance and free up space in the A&E. Most doctors can put a few stitches in… it comes down to common sense. There are an awful lot of hypochondriacs in Ireland.
@David: The problem with crowding is the numbers who require admission and patient flow which is at a standstill. It’s all well and good telling people to first go to their GP, but high acuity patients need to go directly to an A&E. Minor injury units need to operate 24/7. GP’s should have direct access to diagnostics which again should be open 7/7. Triage should also be able to redirect inappropriate attendees back to GP’s.
Another thing that’s strange is people turning up to A&E with not medical issues. Do they not realise theres a out of hours doctor facility Care Doc or South Doc that are more than capable another thing I don’t get is people queuing at a doctor surgery coz they’ve a cough or cold.
Their GPs are still on holiday. If they attend Southdoc they must pay for the service. By going to the CUH they produce their medical card and get it for free and then ring their local radio station complaining about having to wait 8 hours in A&E.
Southdoc don’t charge if the patient has a medical card.
People who require a certificate for work because they have a heavy cold will have to get it from someone. I don’t see the issue with them queuing too get it from their doctor.
Anthony
Most doctors were open 28-30 December plus the car doc deals with any problems put of hours.
Charge everyone the a an e charge. If it is a real emergency you will get admitted and therefore no charge for a and e. Other than that see a GP and let them refer you to a and e if deemed necessary. Medical card holders can see out of hours doc for free but many go straight to a and e as that is free too.
Get well soon, all of ye.
To avoid €100 fee you need a gp letter or a medical card. Seems strange.Ambulance cases or gp referrals only.
Gosh! sick people over the Christmas / winter period, that’s something we’ve never seen before
no mention of the skeleton crews running the hospital last week…
yes yes I know someone will say that Hospital staff are entitled to holidays too, of course they are but not all at the same time
Have seen first hand the volume of patients presenting to an A&e in Cork over the Christmas period. It’s not a case of Skelton staff, in fact there were staff including doctors drafted in from other areas of the hospital to assist with the influx of patients. The doctors and nurses I have met were nothing short of excellent and have given the very best of care to all in the A&E.
No one should be allowed into hospital with the flu unless they’ve been vaccinated. Ditto other preventable diseases. Anyone pissed should be heavily fined.
Awful awful hospital. And shite doctors who will discharge patients without even interacting with them and telling them what’s wrong. Great nurses though.
have your say