Responding to speculation that interest rates are to increase, Fianna Fáil Leader Micheál Martin TD commented, “The move to raise interest rates confirms that the ECB remains fully committed to flawed policies which will do great damage to recovery prospects in the Eurozone. Ireland and other countries damaged by the ECB’s interest policy need to challenge the Bank, yet the Taoiseach has repeatedly refused to even raise the issue with EU leaders.
“In response to a series of questions in the Dáil this week, the Taoiseach confirmed that he had nodded through the appointment of a new President of the ECB without question, comment, or any discussion about interest rates or reform of the institution – even though the new President, Mario Draghi has said that he favours higher interest rates and opposes any moves on bank bondholders. Who will speak up for Ireland and peripheral countries if the Taoiseach refuses to?
“In 2008 the ECB raised interest rates after the recession had already taken hold and now it is intent to keep raising them again before the crisis is over. In a week when a large range of data from Greece and throughout the Eurozone confirms that recovery is under threat, to be raising interest rates is more than foolish – it is directly contributing to threats to the Euro.
“The ECB has a legal requirement to target inflation, but current inflation is largely driven by commodity prices which cannot be targeted through interest rate rises such as this.
“I have been arguing for some time that Ireland and other peripheral countries need to demand a thorough review of the ECB’s operation and to propose serious reforms to a young, powerful but increasingly arrogant institution.
“The Taoiseach should now formally request the European Council to discuss reform of the ECB and changing its remit so that it has a responsibility to be concerned with growth and not just inflation.