Dáil Éireann díospóireacht -
Wednesday, 14 Mar 1990

Vol. 397 No. 1

Written Answers. - Rises in Interest Rates.

Pat Rabbitte

Ceist:

64 Mr. Rabbitte asked the Minister for Finance if he has carried out any assessment of the impact of the recent rises in interest rates on (a) the inflation rate and (b) public borrowing costs; if he will give the outcome of any such assessments; and if he will make a statement on the matter.

Minister for Finance (Mr. A. Reynolds)

Only increases in mortgage rates and in hire purchase rates have a direct impact on the consumer price index (CPI). A 1 per cent increase in mortgage rates has the effect of increasing the CPI by about 0.2 per cent.

I assume that the term "public borrowing costs" in the question refers to the cost of servicing the national debt. Since budget day the weighted average of the interest rates relevant to the cost of servicing the national debt this year has only increased marginally. It is not possible to provide a reliable estimate of the impact of this increase on the cost of servicing debt in 1990 because this will depend on the duration of the increase and on the composition of the debt incurred during the relevant period.