We know that central banks across the world are starting to raise interest rates now. The European Central Bank, ECB, is likely to begin to move the rate next month. Traditionally, Irish retail banks have been very quick to raise interest rates for borrowers but very slow to raise them for depositors and savers. Does the Government have any plans to ensure that Irish retail banks will not make excessive profits in this new interest rate environment and that the benefits of interest rate increases will also be passed on to Irish consumers?

There are commercial decisions involved here. The Central Bank regulates the banks. The ECB has kept interest rates at an exceptionally low level for the past decade, as concerns about deflation dominated. Inflation is now the predominant concern and worry, hitting about 8.1% in May across Europe. Last week, the ECB signalled a 0.25% interest rate hike in July and said a bigger increase might be needed in September. In our previous interest rate cycles, lending rates and deposit rates tended to move together, so there is good reason to believe that at some stage in the near future, deposit rates will move up from the current exceptionally low levels, as the ECB tightens monetary policy.