Christina Finn reporting from Washington DC

TAOISEACH LEO VARADKAR has said if banks are going to push up interest rates for borrowers then they must also do so deposit and savings accounts. 

The European Central Bank announced today that it is to increase interest rates by 0.5 percentage points – the sixth increase since last summer.

Speaking outside Howard University in Washington DC this afternoon, the news “wasn’t a surprise”, stating that the ECB is independent and can make decisions without the approval of European Governments. 

“But one thing I would say certainly say to the banks is that they can’t have it both ways,” he said, pointing out that interest rates on savings accounts have yet to rise, yet it has done for those borrowing. 

“They can’t be putting up interest rates for people who are borrowing and for people who have mortgages. There’s a huge amount of savings on deposit in Irish banks. Never more than was the case.

“And particularly older people who have household savings and other people have savings for other the reasons. Surely the interest rates and the returns they get should be going up as well. The banks can’t have it both ways,” said the Taoiseach. 

Mortgage interest relief

While Sinn Féin has proposed mortgage interest relief should be introduced by the Government, Varadkar said it is not something that is under consideration. 

He understood why the ECB was pushing up its interest rates, he said, stating that it aims to get inflation under control. “That will benefit everyone. But obviously, I’m very conscious that for mortgage holders, and for other lenders, they’re gonna see a further increase in repayments. And that’s, unwelcome,” he added. 

“We still anticipate that inflation is going to fall through the course of the year. Some of that will be a base effect. But we anticipate that inflation is going to fall throughout the course of the year. What we’ve announced already will be implemented. That’s the additional energy credit coming off people’s bills at the moment and also the extra payments for child benefit for pensioners and others. So all of that will continue.”

Varadkar said he still anticipates that inflation will fall throughout the course of the year, probably averaging out at about 5%.

“We still anticipate that inflation is going to fall through the course of the year. Some of that will be a base effect. But we anticipate that inflation is going to fall throughout the course of the year,” he said.

Speaking to reporters yesterday in the Mayflower Hotel in Washington, ahead of meetings with US businesses, the Taoiseach said he did not envisage another banking crisis either in the US or Europe. 

“We’re certainly managing and monitoring the situation very closely. But we’re not concerned about the stability or health of any of our banks. There are a number of large tech companies that are affected by what’s happening here [in the US]. We are monitoring that extremely closely,” he said. 

Leo Varadkar meeting Hillary Clinton in Georgetown University this morning. PA PA

Earlier today, the Taoiseach attended Georgetown University where he met Hillary Clinton at a conference on women’s role in the peace process. 

Varadkar said he looked forward to Bill and Hillary Clinton coming to Ireland next month for the anniversary of the Good Friday Agreement. 

He also paid a visit to Howard University for an African-American Irish Diaspora Network event.