So the ECB has increased interest rates by 0.5% today, with another hike to come in March.
The stated aim of these increases is to curb inflation by making it expensive to spend borrowed money.
But if Irish banks are not passing these hikes on in the form of variable rate mortgage increases or deposits (to incentivise keeping money on deposit rather than spend it) then surely inflation will not be reduced ?
Isn't the real cause of inflation down to;
- Energy prices soaring
- Lots of saved money (due to non-spending during the pandemic) being spent rather than earning very low deposit interest rates
I doubt if ECB rate rises will have any effect on this type of inflation.
Thoughts?
The stated aim of these increases is to curb inflation by making it expensive to spend borrowed money.
But if Irish banks are not passing these hikes on in the form of variable rate mortgage increases or deposits (to incentivise keeping money on deposit rather than spend it) then surely inflation will not be reduced ?
Isn't the real cause of inflation down to;
- Energy prices soaring
- Lots of saved money (due to non-spending during the pandemic) being spent rather than earning very low deposit interest rates
I doubt if ECB rate rises will have any effect on this type of inflation.
Thoughts?