Leo Varadkar under fire for ECB interest rates remarks.

BigBoots82 said:
I agree with Leo on this one. Artificially keeping interest rates low is creating a much bigger problem down the road.
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Given where we came from, low growth and negative interest rates I can see the ECB perspective. Central Banks are tooled up to fight inflation not deflation.

Surely it's better to take the inflationary hit in the short term rather then kill off what could be a recovery before it is fully rooted.

They could be a little less cautious if their policy rates were higher but they're not so easy does it.
 
If inflation was just for the short term this would make sense. Unfortunately, I don't think its going to be so easy to reverse the direction of travel. Maintaining the status quo QE is only adding fuel to the fire. You are in a bad spot when politicians think giving away more free money to chase the same amount of goods is going to help fight inflation!
 
Agree with most of your points but there is a difference between raining in QE and increasing rates. Ones an emergency measure the other is a business as usual button.

Whether an increase in interest rates is a good move depends on what's driving price increases, if it's energy prices associated with basic living, higher rates will not address the problem. Yes it's s large weighting in the CPI but the increase is but reflective of a European economy overheating. Also we're out of a the latest round of lockdowns a wet weak and supply chain issue and bottlenecks will push prices up in the short term. I think it's too early to say we're into a cycle of rising prices.

That's not too say how we react won't make those "transitory" issues permanent.
 
Interest% said:
So if the ECB increase interest rates would that mean mortgage rates go up?
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Tracker rates, definitely.
Variable rates, most likely.
Fixed rates, depends (if you're already on a fixed rate, then no)

In simple terms, yes.
 
ClubMan said:
Tracker rates, definitely.
Variable rates, most likely.
Fixed rates, depends.

In simple terms, yes.
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So those on high fixed rates now that are unable to switch due to whatever circumstances they have preventing then from switching right now will possibly end up on a higher rate when there fixed rate expires?
 
BigBoots82 said:
I agree with Leo on this one. Artificially keeping interest rates low is creating a much bigger problem down the road.
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Increasing interest rates will put more financial pressure on those who already struggling with repaying their mortgage. You agree with Leo.. have you a big mortgage or any mortgage or loan for that matter?
 
Interest% said:
Increasing interest rates will put more financial pressure on those who already struggling with repaying their mortgage. You agree with Leo.. have you a big mortgage or any mortgage or loan for that matter?
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I have 2 mortgages. One in negative equity and one 70% LTV. I'd rather higher interest rates and quantitative tightening than to have to use the equivalent of a wheelbarrow full of money to pay for a pint of milk.
 
This is just posturing by Leo, he knows full well that the ECB will pay no heed to what he says, in fact he hopes they don't respond by actually raising rates because the biggest casualty of all this will be the government's own financial position still highly dependant on borrowing. What will happen all those promises such as the huge financial promises to the greens regarding conversion to low carbon energy, all that money will also have to be borrowed.
The ECB knows it needs to raise interest rates but it can't raise them much for fear of sparking another euro currency crises like 2011 and the pressure it will impose on the finances of Italy and Greece again.
Leo knows this too but it gives him a way of blaming inflation on the ECB rather than his own government's inflation policies such as carbon taxes and the ridiculous MUP (minimum unit pricing) introduced in January
 
Interest% said:
So those on high fixed rates now that are unable to switch due to whatever circumstances they have preventing then from switching right now will possibly end up on a higher rate when there fixed rate expires?
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Possibly.
An inherent risk with a mortgage is interest rate volatility.
 
Interest% said:
Increasing interest rates will put more financial pressure on those who already struggling with repaying their mortgage. You agree with Leo.. have you a big mortgage or any mortgage or loan for that matter?
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It doesn't matter what any individual thinks or what any individual politician says.
Fluctuating interest rates are part and parcel of an economy.
Notwithstanding the years of low rates.
At some point interest rates will rise.
 
I dont know the economics of it all, all i can say from my own situation is that if mortgage interest rates go up beyond 4%, it would put my household into financial difficulty. Id be paying more money in interest off the mortgage. Someone or somebody up the food chain is getting more money from the extra interest im paying. While i have less disposable income while on the same money. I cant see how higher interest rates will benefit my life on earth, it will only create hardship.
I have my own theory. We have a finite resource (earth), finate land space and ever growing population. Higer birth rate than death rate. Demand vs supply. Interest!
 
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