Vol. 503 No. 5
78 Mr. Sargent asked the Minister for Finance the action, if any, the Government is taking to ensure that the half per cent interest rate cut does not make life even more difficult for elderly people depending on interest from savings; and the communications, if any, he has had with the Central Bank in relation to this matter. [10646/99]
The setting of official interest rates for the EMU area has been the responsibility of the European Central Bank (ECB) since 1 January 1999, when the third stage of Economic and Monetary Union (EMU) began and Ireland and ten other member states adopted the single currency, the euro. The ECB is independent in setting monetary policy for the euro area and the treaty provides that neither the ECB, nor a national central bank, nor any member of their decision-making bodies shall seek or take instructions from any Government of a member state or from any other body. I have, therefore, not communicated with either the ECB or the Central Bank of Ireland in relation to the appropriate level of interest rates for the euro area, nor would it be proper for me to do so. Retail interest rates are set by financial institutions themselves in the context of competitive market conditions and I have no role in relation to them.
It is true that the current low level of euro-area official interest rates, while obviously being of benefit to both business and personal borrowers, does mean that savers receive a lower yield on their investments. I have every sympathy for pensioners who depend wholly or partly on income from savings and have seen such income decline as a result of falling interest rates. However, it should be remembered that these lower interest rates are accompanied by low inflation which safeguards the purchasing power of savings and investments. I would also like to draw attention to the fact that an individual or couple, where one or more is 65 years of age or over, may be entitled to a refund of Deposit Interest Retention Tax (DIRT) paid on savings.
