Varadkar urges Irish banks to raise savings rates after ECB interest rate hike

The Taoiseach has called on Irish banks to increase savings rates in response to the latest interest rate hike across the eurozone.

Leo Varadkar said the 0.5% rise announced by the European Central Bank (ECB) on Thursday was not unexpected, but acknowledged it was unwelcome for mortgage holders in Ireland.

Despite the latest in a line of recent hikes by the ECB, the Taoiseach said the Government still did not believe it was appropriate to reintroduce a tax relief measure on mortgage interest to assist those facing rising monthly payments.

While the inflation rate in Ireland crept back up again last month, Mr Varadkar insisted the rate was still expected to fall as the year progressed.

“It wasn’t a surprise that the European Central Bank was going to put interest rates up again,” he told reporters in Washington DC.

“”It is independent, it makes its decisions without approval from EU governments. I do understand why they’re doing it. We shouldn’t forget that the reason why the ECB is putting up interest rates is to bring inflation down and get inflation under control, and that will benefit everyone.

“But, obviously, I’m very conscious that for mortgage holders, and for other lenders, they’re going to see a further increase in repayments and that’s unwelcome. We have no plans at the moment to reintroduce mortgage interest relief. But one thing I would say, certainly to the banks, is that they can’t have it both ways.”

Mr Varadkar said banks should not be increasing mortgage rates if they were not also going to increase savings rates.

He said: “There’s a huge amount of savings on deposit in Irish banks… and particularly older people who have household savings and other people who have savings for other reasons.

“Surely, the interest rates and returns they get should be going up as well? Banks can’t have it both ways when it comes to things like this.”

The Taoiseach was asked about recent figures showing a slight increase in the annual inflation rate in Ireland to 8% last month. The figure in January was 7.5%

“I’d never read anything into any one statistic when it comes to inflation,” said Mr Varadkar.

“You know, that can happen for all sorts of reasons.

“It’s still our anticipation that inflation will fall throughout the course of the year and probably average out around 5%.”