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LAST UPDATE | 14 Sep 2023
THE EUROPEAN CENTRAL Bank has risen interest rates by 0.25%, in the tenth consecutive increase.
For most of those with tracker mortgages, this increase will push up their mortgage repayments by €25 per month or more.
The rate setters faced the toughest call of their long battle with inflation today, but they decided not to pause the unprecedented hiking campaign.
Prices have risen quickly, but the outlook in the single currency area is also deteriorating rapidly.
The central bank for the 20 countries that use the euro had already lifted rates by 4.25 percentage points since July last year to combat runaway consumer prices.
Ronan Brennan, Head of Retail Banking Service Delivery with Delta Capita, said those with tracker mortgages “will be hit immediately”, but those on variable mortgages will feel the effects too.
“The borrowers moving from fixed rate to variable rate mortgages as their fixed mortgage contracts expire are also facing higher interest rates, and in turn a rise in monthly mortgage bills and for some, a greater risk of mortgage arrears,” he explained.
“For the banks, the impact of ongoing and sustained loan interest rate rises is likely to increase the level of missed payments in their performing loan book. It is also likely to really challenge those customers already struggling with existing arrears or who have previously been in arrears.
“Customers who have fallen behind on their mortgage repayments in the past could therefore now fall back into arrears despite having managed to resume making repayments in recent years and so banks could see a reverse in the progress made on some reperforming loans – that is, loans that had previously been cured – in the coming months.”
Further increases this year are “unlikely”, according to Joey Sheahan, Head of Credit at online brokers MyMortgages.ie, who said the continuous hikes over the last 14 months have “wreaked havoc” on mortgage holders.
“Higher interest rates have restricted how much house hunters can borrow as the amount of demonstrated repayment capacity banks want to see has increased by as much as €600 monthly for a €300,000 mortgage meaning banks want to see mortgage applicants save a whole lot more each month.”
Analysts were divided on whether the ECB would implement another 25-basis-point increase or take a break.
Recent data showed eurozone second-quarter growth reached just 0.1%, lower than previously estimated, and the EU on Monday slashed its 2023 and 2024 GDP forecasts for the single currency area – pointing in particular to weakness in Germany.
Europe’s top economy is struggling to get back on its feet after sliding into recession around the turn of the year, hit by an industrial slowdown, high energy costs, and slowing exports to key partners such as China.
The ECB sees inflation reaching 5.6% in 2023, 3.2%t in 2024 before easing to 2.1% in 2025.
In its previous forecasts in June, the ECB had predicted inflation would reach 5.4% this year and 3.0 percent in 2024, while 2.2 percent was expected in 2025.
Andrew Webb, Chief Economist at Grant Thornton Ireland, said the interest rate increase “makes sense”, but this move may be “a step too far”.
“The next few months will be telling,” he said.
Ian Lawlor, Managing Director, Lotus Investment Group, said today’s hikes will have “limited” impact on Ireland’s property market, “as we still don’t have enough homes for the people who want to buy them”.
“While rate rises might reduce the amount that some house hunters can borrow, there are still five to six buyers for every new property coming on stream.
“When it comes to Ireland’s residential property market, rates are simply not the big issue… the core problem is planning, and lengthy delays within our system that are leading to a severe dearth of shovel-ready sites.”
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This government won’t object to any rate rise, their mission is to screw up the country as much as possible before SF take power, then sit back and object to everything. Housing crisis, cost of living, mortgage rates, electricity and gas prices, speed limits on our roads, unlimited refugees, hand outs to anyone who won’t work,homelessness at record levels. Lies from varadkar and Martin about USC, childrens hospital, metro north. It’s endless.
@Peter: well no they wouldn’t object to any rate rise, nor should they. I wouldn’t exactly be opposed to an interest rate rise myself. It’s usually how you fight inflation, dampen money markets by raising interest rates, which usually restricts money flow and stops inflation going mad. That’s why it was done previously. That’s why it’s been considered again now. But you’d have to actually understand what is going on to know this rather than blaming the big bad government for everything you don’t understand.
@Journal Commenter: this inflation bubble isn’t caused by the usual market forces, Ukraine war, backdraft from covid etc. All this is doing is making extra money for the banks
@Brian Keelty: raising interest rates actually doesn’t make much extra money for the banks as the intra bank rates will also jump. Banks would rather lending be cheap not expensive. And the inflation is actually two pronged, war in Ukraine and the Covid money for everyone let’s throw it around situation. War in Ukraine is exceptional. Money for everyone let’s throw it around is your standard, typical, everyday inflation occurrence and driver. So yes, tightening the money markets would be your standard, typical, everyday inflation fighting occurrence. Covid was the reason the money supply was massively increased. Now the money supply needs to be decreased. The war can’t exactly be controlled, the money supply can.
@Peter: It’s amazing…..all the sf heads are coming out with the same rubbish.government are sabotaging the country so sf can’t fix it….Did you ever hear such nonsense.
@Peter: And another thing,You are complaining that this government who might be in opposition will do exactly as sf are doing now,in objecting to this that and the other and frustrating the government at every turn.It’s a fact that sf have objected to 12000 homes(in Dublin alone)since 2018.
@Journal Commenter: taking money from people that need it most and giving to the banks
9 interest increases haven’t worked so why would ten. They should be tackling rising energy and fuel costs they’re the real reason for inflation
@Journal Commenter: not working
@Paul Harvey: “taking money from people that need it it and giving it to the banks” translation; I do not have an absolute notion what I am talking about but I am outraged and want to blame the government for everything!! Let me start by saying, our government does not control interest rates. The ECB does. Secondly, and I expect this one to really shock you, banks prefer lower interest rates. Banks actually make a lot more money with lower interest rates. Banks actually have massive loan books themselves, as in they borrow massive amounts of money off other banks. Interest rate increases makes it more expensive for them to borrow this money and harder for them to lend out money. I can bet my bottom euro that if you gave the banks in Ireland the choice, interest rates would NOT move.
@Journal Commenter: listen, we don’t care about these facts.
We come here daily too blame the guberment for all of our woes.
This gets us likes from similarly simple-minded folks.
As an aside, there’s lots to be blaming the govt for, just not interest-rate hikes.
@Ciaran Foster: not protecting the government at all. They have been a joke in so many areas. However I think blaming them for interest rate hikes may be a bit of a stretch now alright!
@Journal Commenter: . The definition of insanity is to keep doing the same thing and expect a different result. Nine consecutive interest rate rises has hardly made a dent in inflation. Our government has introduced a number of levies and VAT increases recently which will increase the price of concrete, hospitality and fuel. These will all contribute to further inflation. We now have a tenth consecutive interest rate increase ordered by the very highly paid hierarchy at the ECB. Sadly it appears that between them the financial minds at the ECB cannot devise any other mechanism to combat inflation other than the exceptionally crude and to date entirely unsuccessful strategy of consecutive interest rate rises. Ordinary people are suffering through no fault of their own.
@Richard Ford: money markets aren’t instinctively reactive. It takes money markets 6-12 months (if not longer) to react to interest rate changes. You don’t increase interest rates and hey presto inflation is reducing tomorrow morning. Lovely if it worked like that but it doesn’t. This will only tackle the demand side of inflation anyway. Money market must be bloated from QE and loose management I would imagine directly related to Covid times where all governments seemed to have plenty of money to throw around and throw at the problem. Supply side pressures need to be addressed (energy companies) who are price gouging. Increased interest rates with massive windfall taxes on supply’s side inflation drivers (again energy companies) will eventually drive down inflation to the 2% deemed optimal
@Richard Ford: and the ECB will have the data of exactly how much euro is in circulation and how that is weakening the currency and driving inflation. Interest rates will try and reduce that amount of euro in circulation but again that takes time. Interest rates likely increasing because they know where the interest rate needs to go (that could be 5% for example) but they don’t want to go, hey everyone we are increasing interest rates by 4.5%. They’d rather phase that through multiple .25% increases to help people deal with the additional pressure marginally. I wouldn’t be surprised if this isn’t the last interest rate rise too, don’t want to be the bearer of bad news but it very well might not be.
@Journal Commenter: 10 hikes is needed, your having a laugh, how many more.
@Shane O Mac: read the above comments. 10 hikes likely weren’t needed. One hike of maybe 3% was needed. They would rather do that as 12 hikes of 0.25% than one go of 3% for a multitude of different t reasons.
@Journal Commenter: The ECB will cause a recession which will lead to lower prices….but also increased unemployment, lower living standards, increased crime levels etc. Germany is in recession, even though Lagarde stated no country in the EU would be in recession in ‘23!! She/ECB are clueless. She’s a lawyer by trade ffs. Many now feel that the 2% inflation level is outdated thinking.
@Peter: Politicians don’t elect themselves nor do I see any major protests by the citizenry!
@Journal Commenter: . Will you get away out of that, you are making way to much sence. Best reply/comment of the day.
@Journal Commenter: this is not economic history repeating itself….a different set of circumstances are driving this situation…. economists are like food critics they get it wrong sometimes and seldom admit it ….and at the end of the day its basically just an educated guess… this inflation crisis is being completely driving by evants of the last 4 years….and its time to rethink the solution for this one
@Journal Commenter: . This round of inflation isn’t down to demand or consumption as you well know. The crisis began more than 12 months ago. Prior to that the ECB had interest rates at record lows for years in order to stimulate the Eurozone. How did that work out? You imagine the “Money market must be bloated from QE and loose management” due to “Covid times.” As opposed to imagining things the facts are that this crisis is persisting and ordinary people are suffering. We have emerged from a harrowing mortgage crisis and if the ECB persist we will have to deal with another mortgage. A recession in the Eurozone may be next on the cards and wouldn’t Putin just love that.
@Richard Ford: hardly imaginary to suggest every government and the ECB were throwing money around during Covid and I amongst many at the time suggested inflation was going to run amuck 12 months after life returns to normal. Putin decided he was also going to pour a load of the gas he has on top of that fire too. But a lot of people saw that coming. A mate of mine refixed his mortgage for 7 years during Covid lockdown, because he saw it coming. But yeah sure, it was completely unpredictable. The war was completely unpredictable tbf, inflation running wild wasn’t.
@Richard Ford: and yes the ECB had record low interest rates for too long in my opinion. Stank of bertie in the mid 00s and thinking everything will be grand, this will last forever.
@Journal Commenter: At last an admission of the fallibility of the ECB.
@Journal Commenter: If you’re not blaming “FFG” for this, global warming, puppy farms, the fact that grass is green and cats like milk you’re OBVIOUSLY a “gubberment shill”!
@Journal Commenter: at the expense of the homeowner. This would be logical if every other industry didn’t dig deep into our pockets.
@Richard Ford: that is not the definition of insanity.
@uUleRhCu: Now JT. . Would you like to tell the boys and girls the source of that statistic that you’re espousing as a fact? .. that’s right boys and girls .. from a FG report. Hmmmmm .. hardly the most credible source now is it. you’re as bad as the ‘sinner bots’ you’re constantly attacking ..
@Journal Commenter: not once did I blame the government. Banks are making huge profits in case you haven’t noticed. The mortgage holder on the other hand are struggling. I would imagine the people with no mortgage are the ones saying this is a good idea. How come the banks are so slow to pass on interest rate increases to savers
Pure greed that’s why.
@Jonathan Kennedy: I paraphrased Einstein. Take it up with him.
@Journal Commenter: the problem is that the interest rate hikes are supposed to be just one side of it. The whole idea is to take money out of the economy by discouraging spending, partly by making borrowing more expensive, but also by making saving more attractive. The refusal by the banks to increase deposit interest rates, and the blind eye turned to it by the government is dampening the effect of the hikes and causing it to be far more dragged out than it needs to be. Meanwhile, those of us stuck paying vulture funds like Pepper are forced into bearing the brunt of it.
Best to put it up again please. In fairness ye nearly have the Country closed down. Another hike in rates should get the job done for ye. At least it’s something ye are good at.
Keep on screwing people, roll on next election. Clear the whole lot out.
European, National and local governments.
We need a new people focused government.
What we have is an Excel spreadsheet Government.
People are just a nuisance
@Max Cooper: eh max I think your confusing politicians and bankers here mate. Two totally different horrible species
@Max Cooper: Absolutely
@Max Cooper: so much confusion in one comment. The rise in interest rates is a necessity to fight inflation. In fact they should have probably been raised much earlier. The ECB dictates the interest rates and the purpose is to curb inflation. They are actually doing it for the people. But hey you don’t understand it but please continue on your misinformed rant. Bet you will pop in to another comments section in a bit and give out mad about the cost of living crisis and inflation. Irony will be lost on you, obviously.
@Journal Commenter: so the only way to stop inflation is to cause misery on struggling families? That makes sense, why don’t they just tax us a 80% that’ll stop people spending money.
@Martin Mongan: the number 1 method of halting inflation is decreasing the money supply by raising interest rates yes.
@Martin Mongan: it’s money markets they are concerned about. And it’s also to stop banks having access to cheap funds on the intra bank markets which makes it tougher for them to loan large sums of money and increase the money supply. It’s not actually aimed at you or mortgages, too small time. Fiscal policy does not affect the money markets. Fiscal policy (tax) is pretty useless in fighting inflation. Government spending is pretty much the only thing that can help. And when I say spending I mean they need to STOP spending. Oh and you’re hard pressed families comment, what do you think will hit those families harder, a couple of years of interest rate increases or 7-10% inflation year on year? Pick your poison? Or do you just like to complain?
@Martin Mongan: also finally, government controls fiscal policy for Ireland. The EU, largely the ECB, controls monetary policy for Ireland and the eurozone. Something that is evident you don’t understand.
@Journal Commenter: Incorrect.
Or, at least, this is not the best way to fight supply-side inflation.
Increasing interest rates is effective on demand-side inflation.
But inflation caused by shortages in the supply side, or cost increases on the supply side are not properly addressed by interest rates. What increases in interest rates will do is suppress the economy – stagnation – while only having a smaller effect on inflation.
The great risk of such a policy is inflation coupled by a stagnant economy, aka stagflation.
Inflation caused by problems on the supply side – whether by disruption in the supply chains, or by corporations taking advantage to increase profits – should be handled by addressing those problems, not the symptom of inflation caused by those problems.
In this case, as inflation is largely caused by energy companies taking advantage of the disruptions caused by russia’s invasion of Ukraine to maximise their profits the best way to deal with that would be to impose a 110% tax on the extra profits made by those companies.
The cause of inflation would then disappear very quickly.
But our leaders are in thrall to big business, and so we must pay for the greed of others.
@ItWasLikeThatWhenIGotHere: how much of this is to do with Ukraine and how much is it to do with the money supply which ballooned during Covid. Now the ECB would have the inside track on the current money supply. They know exactly how much they loosened it when the world was fighting Covid. And I would guess (granted it’s only a guess) it was loosened quite a fair bit. There was money flowing from all angles to hell with Covid. It didn’t appear from thin air so to speak and I think we are all pretty sure where it appeared from. Put it this way, do you think we would still have inflationary pressures driving inflation to 4-5-6% had the war in Ukraine not happened? I would be pretty sure that we would have. I’m all for addressing the supply side pressures too, esp in the energy markets.
@ItWasLikeThatWhenIGotHere: but I think interest rate increases were inevitable after Covid anyway. I was trying to buy a house just as we were coming out of Covid and me and my partner were trying to rush the sale through on our long term fixed rate because we knew interest rate increases were coming.
@Journal Commenter: Well, my experience is that inflation kicked in with the enormous increase in energy prices over the past almost 2 years.
Energy costs factor into everything we do. The food we grow, harvest, process, and distribute. Clothing. The packaging used. Each and everything we need and buy consumes energy to make it, and to transport it. Getting ourselves to and from work, shops and anywhere else.
I did not really see price increases during the Covid period (yea, I know, the pandemic is still on, but you know what I mean), but I certainly did after russia’s invasion of Ukraine.
@Max Cooper: this rate is set by the EU
It’s nothing to do with the government
ECB rate .. the clue is in the name
@Max Cooper: the problem is the 1d1ots will continue to vote for Fianna gael because there grandfather played GAA with there grandfather who had a pothole down a bog road fixed for them 50 years ago!
@Michael o connor: yes Michael, it is FF and FG that are raising interest rates. Good man Michael.
@Journal Commenter: you can shine it up all you want, the simple fact is the only method they have to stop inflation is causing even more misery to struggling families. Nice to remove the human element by saying money supply and not the reality which is struggling family’s are being punished through no fault of there own.
@Martin Mongan: that’s fine Martin. Let inflation rip it is then so. You’ll be complaining about how poor families are suffering when the price of everything keeps increasing all the time and wages follows years behind. It no doubt will be the government or whoever you deem at that times fault for not having done anything about it as well. You have a choice, deal with the fixes for inflation, or deal with inflation.
Judging by the comments here, there is (surprise surprise) a misunderstanding about the ECB and interest rate policy.
1) Interest rate setting is nothing to do with the Irish government. It’s the ECB who set rates.
2) The ECBs job is to maintain price stability so as to ensure long term economic growth.
3) It maintains that price stability is most effective when inflation is an average of 2% in the medium term.
4) The inflation figure it uses is the core inflation rate averaged for the entire eurozone – individual countries rates are not taken into account other than feeding into the weighted average.
5) Core inflation is the Consumer Price Index (CPI) with volatile items (food and energy in the main) stripped out.
6) when core inflation is too high, rates are increased to make money more expensive to borrow and repay so people spend less, this in theory should reduce demand for goods and bring inflation back to 2%.
7) It’s fairly predictable that rates will follow inflation, if we had better financial literacy in Ireland, people would have fixed mortgage rates last year and avoided a lot of the current pain.
@Wombleman: People do understand that this has nothing to do with the government, however they have proven also to be clueless in trying to ease the pain from things like interest rate hikes, when allowing uncontrolled greed hit Ireland in other ways which means these rate hikes are even more painful for people
@Wombleman: You left out one thing. The ECB enables banks to enhance their profits, by paying public money for them to lodge our deposits with them at high rates. While in the meantime their local minions, the Central Bank ensures they pay us a pittance. It is all a ponzi scheme, but dressed up legally.
@Wombleman: thank you!!! Eventually! Someone who actually understands what’s going on. This place can sometimes be an absolute indictment of our education system…
@Donal Ronan: Stop putting crayons in your nose and leave the tin foil alone. Good man.
@Wombleman: yes but not everyone has mortgages and many are in nice cushy positions and rate hikes won’t effect them with mortgages so they keep spending and we suffer it should have proven by now that ECB rates increases are not the answer
@Paddy C: Paddy you are so far off the mark it’s scary. The point isn’t to stop everyone spending any money at all, like you couldn’t be further off. Sure just crash the economy altogether… The point is to affect banks abilities to lend (to people and each other) large amounts of money and therefore increasing the amount of money in circulation. The fact that Joe, Tom and Dan don’t have a mortgage and therefore swanning off for a long weekend in Killarney on the beer next weekend has absolutely nothing to do with it.
@Journal Commenter: I don’t insult people who make comments here. Forgot your tinfoil put down and look at hard facts.
A good idea for you, would be to look at the Irish banks accounts. There you will see that a lot of their profits are from deposits with the ECB.
@Donal Ronan: it’s very hard not to when the vast majority of people are blaming our sitting government for interest rate increases.
@Journal Commenter: To prove I am not waffling, from the Irish Times:
‘Bank of Ireland makes profit of more than €1bn in first half of the year
Net interest income surges to €1.8bn as bank gets 3.75% rate on surplus deposits lodged with central bank’.
None of the banks are paying their customers 3.75%. I stand over my comment.
@Journal Commenter: it’s not that I’m talking about it’s those who do not have mortgages who are drawing down sizeable loans for all the new cars we see going round and how Dublin airport is packed out the door with expensive holidays, raising the rates aren’t having any real effect on those as such,I know it applies to all EU but it’s effecting here mostly just people with mortgages who there a lot of are going week to week trying to keep up with it so they’re way of dealing with it only effects certain people throughout which is why it’s taking forever to slow it down because most aren’t effected just those with heavy debt
Politicians will do nothing about that, too busy to look after their own good.
Too much paid, too many expenses, pensions and such…
Remember that when people can’t eat or have a roof, that when they start to riot. A riot become a revolt. A revolt could become worse.
Politicians will be too happy to say it’s not their fault and let it at that … again!
@Dominic Leleu: So to summarize, you would like politicians to interfere in Central Bank policy as the Irish public are on the verge of starvation.
Very poor analysis. When the Irish government governed interest rates before the Euro they were as high as 16-18%.
Two years of insane spending during covid, and now pointless looking sanctions that were meant to stop the war in Ukraine going beyond 6 months, and yet it looks like it may never end, has literally dropped Europe into an inflation dumpster fire…..and the ecb answer is to throw a few more grenades into said fire.
@Tom Newell: Who told you the sanctions were were meant to stop russia’s brutal invasion of Ukraine going beyond 6 months?
Sanctions will have to remain long after russia’s defeat.
Sanctions will have to remain until russia has handed over its war criminals to the Hague, and have agreed to reparations for both Ukraine and the rest of us.
@ItWasLikeThatWhenIGotHere: Sanctions are harming Europe and strengthening Russia. Just look how the rest of the world outside of the “West” is going about their business. Soon the $ will be worthless and the USA’s vassal states will be dragged down with them. Our government backed the wrong pony on this one. But of course they don’t really make any decisions anyways. They are told what to do.
@ForYourSafety: If sanctions are strengthening russia, then why has Putin been trying to have them removed since they were imposed?
It has been the value of the Ruble that has been declining against the Dollar, not the other way around.
Backing the wrong pony in the race?
Backing a people fighting to keep their freedom from a tyrannical oppressive regime?
Oh, you mean we should just look to our pockets?
What is wrong with you?
@Tom Newell: how is that what the ECB is doing? Can you please clarify for me what the primary method of fighting inflation is? I will save you the trouble and tell you the answer; IT IS RAISING THE INTEREST RATES!
@ItWasLikeThatWhenIGotHere: Do you have any mind of your own? or do you only think what you are told to think? That seems to be the case, it’s sad. You feel virtuous supporting a country you probably have never been to and probably never will, just because you were told a story and you believed it, a bit like Santa Claus. You see if you did a bit of digging you would know the USA is the one who provoked this war by violating the Minsk agreement, but you don’t want to think about that, you’ve been told not to think about that. Life is not like a Hollywood movie, it’s not the “black & white” that you are presented with. You represent the intellectual apathy that has infected western society, incapable of nuance and critical thinking. Maybe awakening will come for you and others like you eventually, but by then maybe it will be too late for you, and your progeny. I hope I’m wrong, I hope you’re right, but I logically don’t think so.
@ForYourSafety: Ah, the old ‘Minsk Agreement’ excuse is being rolled out now, I see.
russia guaranteed Ukrainian security in exchange for Ukraine giving up its nuclear arsenal (the Budapest Memerandum).
Could russia abide by those guarantees?
No.
It has been interfering in Ukraine since. It tried to install puppet regimes twice. And failed twice.
After the 2nd failure in 2014, Putin invaded Crimea. And invaded the Donbass, those mineral rich provinces of Luhansk and Donetsk that border russia.
Having failed to gain control of the Donbass in the 8 years of war since, Putin launched a full-scale invasion of Ukraine last year.
As for the Minsk agreements, russia agreed to withdraw its forces from Ukraine and respect Ukrainian borders.
Guess who broke those agreements?
Can you explain not only how you are so gullible, but how you can spread obvious russian propaganda lies when we all see russia killing Ukrainian men, women and children every day.
Men, women and children that had done them no harm.
@ItWasLikeThatWhenIGotHere: I do not agree with any kind of war, no matter who the aggressor is. How many wars has the US started over the last century? how man wars has it been involved in? how many regime changes? how much interfering? It is you sir are the gullible one. If Russia wanted to put missiles in Mexico and establish bio-weapons labs there, would the US be justified in invading Mexico? I’m sure I know where you’d stand on this.
@ForYourSafety: Just to be clear, you would allow russia to invade Ukraine, to kill and maim its people, to destroy their homes and homeland, to subjugate a democracy and put its people into tyranny?
russia killed Ukrainian people yesterday, one a 6 year old boy.
russia will kill more today.
Don’t these people have a right to their freedom?
And don’t we have an obligation to do everything we can to help?
@ItWasLikeThatWhenIGotHere: Are you hallucinating? where did I say that? you use these emotional arguments to play into the accepted narrative. It’s not as simple as good guys v bad guys, it’s not a movie. Was Russia totally unprovoked in your view? Can the USA, Nato do any wrong in your eyes? Are they responsible for MILLIONS more deaths than Russia in the last 50 years? Countless more wars? The MSM wants your attention on Ukraine, and so you parrot their official story. You’re just a repeater, probably never had an original thought in your life. Ukraine was and is one of the most corrupt countries in the world. Their current president was installed by Victoria Nuland. The peace talks that started shortly after the invasion were scuppered by Boris Johnson. You want to blame somebody, I get it, big bad Putin….you would have been shouting HATE HATE in Orwells 1984. Forever wars are what the US has brought us, not Russia.
this isn’t normal text book inflation though. the entire manufacturing and services sectors raising prices with no basis to do so.its not driven by demand pull or cost push. raising prices on both luxury and essential goods. When consumers have no alternatives what do you do? starve? become nudists? adopt nomadic lifestyles?inflation hasn’t been mentioned since 1980′s suddenly its everywhere again. something stinks.
@MHM: Maybe the hippie lifestyle is the only way to go now.
My tracker is astronomical at the moment. Literally can’t afford another hike.
@DavyDoDa: Why did you not switch to a fixed rate? This was signposted to anyone with any sense. As you have a tracker, you would have got a great rate in 2020.
@Donal McCarthy: easy to say this now, who predicted 10 hikes.
@Donal McCarthy: Try being self employed and dealing with the banks on your mortgage.
Inflation is caused by governments printing money ,usa ,europe, this is why the bric nations want out of the dollar
@john mac: The mega rich, make mega profits in all weather.
Hello Stagflation
I pity the people affected with their mortgages. Massive house prices and massive mortgage. Why bother? Ireland is not that good
@Hector turtlehead: It’s Europe wide.Not just in Ireland.
@MHM – Inflation followed a similar trajectory post WW2, what started out as a supply shock inflationary episode was used by companies to increase profits as they believed everyone would follow suit – so-called greedflation. Some economists are of the opinion that this is what’s happening at present.
Profits are up no doubt …
Conflicting data means we have squeezed mortgage holders as much as we can and still they must be buying stuff as multinational companies won’t lower prices of there goods,they ain’t sure what to do now but the usual answer is squeeze the people more
One just has to smile at most of the comments here..they owe the Journal for the space that lets them have their little rant.
@JP nice little rant
And the pressure just keeps piling on for the workforce
This is ridiculous. The ECB and it’s rate hike is the CAUSE of much inflation. Putting up interest rates only removes from disposable income – it has no positive effect.
@John Moylan: how does it cause inflation?
@John Moylan: I think you are mixing up cause and effect here John.
They won’t be happy until they turn the citizens of Europe into revelation where we’ rise up and pull the whole rotten banking sector to ribbons
Do you people ever proof read things before publishing?
Subheading says increase of 2.5%, body if article says .25% – there’s one hell of a difference there sort it out
Just feel like screaming hearing this news. It’s so utterly depressing and people’s mental health is seriously on the brink with these non stop hikes on everything. Absolutely sick to death of it.
Fking Disgraceful
Anyone who thinks that there are not several more ‘hikes’ over the horizon is sadly optimistic. As the main Western world’s currencies’ (principally the US dollar and the Euro) real purchasing power is incessantly eroded by the non-stop ‘quantitative easing’ the banks have to increase the COF’s (cost of funds) as their return is smashed by the inherent deflation of the value of the collateral, as well as the broke commercial rental sector. But as long as we achieve ‘net zero’ by 2030 we’ll be grand…
Lol thanks Christ I’ve no mortgage.
@Paul Kavanagh: nobody cares
FF and FG have destroyed the country .90 % of the country on its knees get out and protest wake up LENSTER HOUSE 20TH SEPTEMBER
@M G: yes it is FF and FG who are increasing interest rates. Please bring your colouring book and crayons to Leinster house with you.
@M G: 90% on their knees???? Have you been to Dublin airport recently? Lots of daily flights to the sun. Came home last night myself. Flight full to capacity. Some people are hurting. Many are not or have adapted their lifestyles accordingly.
@Donal Ryan – I can’t respond to you directly I’m afraid but, in any case;
If you want to see a conspiracy everywhere then you will, regardless of what anyone says.
Our banks are very fond of a bit of profiteering for sure and they have had enough scandals to solidly prove that they are very far away from being consumer champions – there is zero doubt in that.
All the same, whilst deposit rates have not been passed on, Irish banks have also been slower to pass on mortgage rate increases- we went from being the most expensive mortgage country in the eurozone to 6th most expensive while rates have been rising.
Also, when ECB rates were negative, banks had to pay them for holding overnight liquidity so they have been charging banks for 10 years.
While the ECB and Domestic banks are not consumer centric, it’s not a collusion, it’s just economic policy focused on economic stability and not individual circumstance.
Not everyone is out to get you my good man, hardly any of them actually know you even exist ;)
@Wombleman: Inflation is a tax on the poor, counterfeit money which is worth nothing in real terms. Inflation is theft. If you don’t understand this you understand nothing about the modern monetary system. There is a very good reason financial literacy is not taught in our schools, and you are a fine example of the result the powers that be wanted to achieve.
Ye need to change that bi-line under the photo because I nearly had heart failure. 2.5%… Shudders.
Please proof read your articles before posting, has it been increased by 2.5%or 0.25%. Very lazy
Fighting inflation with one hand while printing free money with the other. These grey-haired, older folks at the top tables of politics, economics and enterprise really don’t like to change course halfway through a process even though they are struggling to make things better. Rates are already too high too soon; the magic money printers buying up corporate and state bonds is what is causing the issue – cut this out and force prudence in economies and markets!
All high and mighty at the State of the Union eh? Reminds me of ducks on a lake… Calm on top…Frantic underneath.
More interest on deposits and suchlike, might lead to more savings and less spending and in turn reduce inflation.
Banks now should up interest rates across the board not just on mortgages.
Looks like arrears will rise dramatically. No one can continue to sustain these rises.
@ForYourSafety: Again, if you want to see conspiracy then I can’t change that.
If you’re going to go down the rather predictable path of staying that the whole world acted with a concerted QE plan just to steal money from their citizens and give it to George Soros then away you go.
Might be worth thinking about two things on your way to the aluminium Fedora shop though:
What has happened in Turkey whilst Erdogan was ditching monetary policy and using his non orthodox approach to fighting inflation?
The very real possibility that QE doesn’t cause inflation (we’ve been doing it for 13 years now …) although it does possibly make its effect worse when it does happen.
Anyhoo, have a good day sir.
@Wombleman: Ok, I’ll ignore your lazy jibes related to Soros (you mentioned him not me) and the tin-foil hat stuff, which is really a lazy insult for anybody that can’t conjure a convincing argument. You say that QE does not cause inflation, but the evidence suggests otherwise. As regards Turkey. The country’s inflation rate has been soaring in recent months, and QE is a major factor.
Central banks buy assets, they inject money into the economy. This leads to higher prices, as people have more money to spend. In Turkey, the government has also been printing money to finance its budget deficit, which has exacerbated the problem.
Of course, there are other factors that have contributed to Turkey’s high inflation, but QE is certainly one of them. So, to say that QE does not cause inflation is simply not true. In fact QE is a form of inflation in itself. When central banks create money out of thin air, they are effectively devaluing the currency. This leads to higher prices, as people need more money to buy the same goods and services. Legitimised theft. So, next time someone tells you that QE does not cause inflation, just point to Turkey. The country is a living example of how QE leads to soaring prices.”
@ForYourSafety: while I think most of your comments are absolute gibberish nonsense of the conspiratorial nature, QE absolutely does cause inflation. Don’t even look at Turkey. There are better examples. Zimbabwe is a great example of how QE caused hyper inflation, case study 101. QE absolutely does cause inflation.
@Journal Commenter: You do know that conspiracies are a fact of life, they happen all around us all the time. Heard of Operation Northwoods? Heard of Event 201? or Catastrophic contagion? you say i’ve commented gibberish, give me an example so that I can counter it.
@Wombleman: Of course QE is inflationary – that’s why it was introduced once interest rates were less than 0% – they had no inflationary tools left.
If it hadn’t been for QE, the economies of the first world would have tanked.
The problem is that we have come normalized to insane (but fully justified) macroeconomic tools like less than 0% interest rates and QE.
The following point was made yesterday , I think it’s worth sharing.
If by their policies the EU increase inflation why then should they increase interest rates to deal with problems their policies created in the first place. Eg. Policies to reduce farm produce which increases food costs. Carbon taxes increase with real alternatives available and more
*real alternatives not available
And deposit rates while rise accordingly within 72 hrs, of course they will ‘oh ye of little faith!’
,there is a good few Countries want out of the EU,they are sick of been bullied,the war in Ukraine,it’s the US fault,Biden is going to be impeached hopefully,all the money missing from the US and the EU that went to Ukraine,will be found,but was funneled back to the US,it’s time the EU put their Countries 1st,Mehole knows his time is up,that’s why his all about Brussels,his watching a cushy job there,I can see the EU falling,unless they cop themselves on.look at all the other Countries that’s been devastating with fires and flooding,all our aid is going to Ukraine.Brics will be the US downfall,the EU needs to work with them not,because the dollar will be worth nothing,it’s time the bullies were stopped..
Rode into dust.
I myself will be renting a deluxe 4 wheeler, towable, transitory and affordable. Coming to a side road near you, Jon Jon. No mortgage required.
…Good news about the chocolate oranges though.
@Journal Commenter: There is no clear cut evidence that QE causes inflation – it’s the dominant narrative for sure but isn’t actually proven (unless you can find something that I’ve missed – which is very possible) if you think about how QE works:
In the course of QE, the Central Bank buys a bond from investors, the transaction is completed through an intermediary — a bank. The proceeds from the sale become a customer deposit at that bank, a liability. At the same time, the bank is credited with a reserve deposit at the Central Bank for the same amount, an asset.
Because a bank will always have fewer reserve assets at the Central Bank than deposit liabilities, the addition of the same amount to each will push the bank’s reserve/deposit ratio up. QE improved the bank’s liquidity in that sense.
A bank that has more liquidity has an incentive to lend. They don’t have to lend more, but they have reason to, in order to optimise their balance sheet. This is called the “credit channel” of QE.
But; Banks won’t lend money out just because they have it (well, they shouldn’t anyway *cough* GFC *cough*) they have to find borrowers willing to borrow and able to pay back.
This supply of quality borrowers is not created by QE but by healthy economic growth conditions.
Central Banks have been doing QE for over 10 years and yet we only saw inflation rise in 2021 after the re-opening of the global economy where excess money met decreased goods causing a huge demand surge.
That surge led to the perfect conditions for credit to increase and here we are .
So, it’s not as simple as QE causes inflation, it needs more that that. When we hit an inflationary cycle however, QE definitely magnifies it.
In my humble opinion of course.
@Wombleman: QE causes inflation as it’s a de facto tax, an insidious hidden erosion of wealth. If it were phrased as a policy in the annual budget the public would see what’s going on, and they would no longer be prepared to ‘eat cake…’.
@Wombleman: QE was solely responsible for the hyperinflation in Zimbabwe. It is the best modern example of how QE absolutely does drive inflation. People actually stopped using money in zimbabwe and returned to barter for a brief period because they were so unsure whether the money they were accepting today would actually be worth anything at all tomorrow. This was due to QE in absolute overdrive. It is inflationary. It is accepted worldwide that it is inflstioanry and i question the motives of anyone trying to suggest otherwise tbh.
@Wombleman: Money supply and velocity of money are the main factors in inflation. QE increased money supply during a period of falling velocity. That velocity has since returned to pre-recession levels and inflation took off
@Journal Commenter: Genuinely not looking to be antagonistic but your supporting proof just seems to be ‘It just does right’
There is a difference between what happened in Zimbabwe (printing of actual money) and what is happening with the ECB and Fed (bond purchase) the latter relies on favourable credit conditions.
Let me put it this way, if QE causes inflation and that, as you state is irrefutable fact, why did we not have inflation issues in 2011, 2012, 2013, 2014, 2015, 2016, 2017, 2018, 2019, 2020, why was it only in 2021?
That was a quick pause lol! They were considering information on whether or not to increase only a few hours.
What did the fella say at the Economic world forum,We will end up having nothing,and be happy for the little bit we get,Ukraine is going to be the blue print for these 15 min cities..look at Maui,the government is talking about taking the people’s land,and doing what they want,but thank God,people are realizing these fires were done,the likes of Oprah and the wealthy,none of their big properties were damaged,the Elite wants the land,there’s people been called from companies,asking them to sell them their land,and will pay cash,without even seeing it,The wealthy don’t care that were finding out all the bad their doing.they are untouchable,what does the likes of Oprah,Gates needs 10s of thousands of land,and doing nothing with it.The Evil has taken over.
@Kathleen Peters: it looks like it’s going that way and the only way that’ll stop is riots at some point but its all being done slowly and carefully bit by bit corner people into submission
The ECB are the worst mafia in Europe. They are thieving billions from EU citizens to enrich the banksters, while Paschal Donohue and his sidekick Michael McGrath cheer them on. The rising of interest rates to lower inflation is just a theory and even the crooked Lagarde admits that. Thieves.
They are trying to stop people spending, what they call Conspicuous Consumption. I notice people in Dublin eating out in restaurants, Mon and Tue nights. I am thinking to myself WTF? I could not justify this myself, and I am wealthy.
Of course they have
Our government must help everyone now with a mortgage.. Enough is enough, with rate increases and higher cost of living..I don’t see the banks losing any money, just making more profits..
Why is the dramatic word hike used? It’s a .25% of a rise.. if there was a drop of .25% I don’t think it’s described as the rate being slashed
The Danes and the Swedish must be laughing
Not going to stop until theres plenty In arrears and on the homeless list if we’re getting it hard to pay it now won’t be able to keep up with arrears I have to say up to now it’s done wonders to the inflation which is why they keep pushing it up because it’s obviously not having the effect they want to cannot effect everyone with interest rates which only apply to mortgages not everyone has a mortgage therefore it won’t slow it down at that rate expected othere loans which are increasing are nowhere near that rate but sure let’s keep going if we hit people with mortgages enough that’ll send them homeless so what I suppose they never cared much up to now
Vultur funds laughing all the way
Anyone who thought that the cheap money was going to be an ongoing thing need their heads examined. As the bold CJ once said we are living way beyond our means. I would caveat that by saying “some” not all. Look at the cost of cars, and other items and tell me people don’t like their fur coats. Well you know the saying, all fur coat and no…mmmmm.
have your say