Irish Finance Minister Michael McGrath says that companies should do their part in the fight against inflation by lowering their prices.
He also thinks the European Central Bank (ECB) should be careful with interest rate hikes because this could harm companies and households. Instead, the ECB must consider “the real impact on people of the decisions that are made,” McGrath said at a meeting in Stockholm with his EU colleagues.
According to McGrath, continuing to raise interest rates has negative consequences in Ireland, especially for the poorest households. This is because they have to deal with rising mortgage costs, as a result of which they are less able to make ends meet. In addition, some companies are tied to loans with variable interest rates. As a result, costs continue to rise.
The ECB will decide on a new interest rate hike next Thursday at its next policy meeting. Since last year, the ECB has been trying to bring inflation down by raising interest rates, which makes borrowing more expensive.
However, McGrath also wants companies to help by passing on cost windfalls to customers through price reductions. This reduces the pressure on the ECB to raise interest rates. “If that does not happen, the burden of reducing inflation falls entirely on monetary policy. And we know what that means for people and businesses,” said Ireland’s finance minister.
