Finance Minister Michael McGrath Urges Caution for ECB Interest Rate Hikes Due to Real-Life Impact on People and Businesses

Finance Minister Michael McGrath has advised the European Central Bank to exhibit caution and consider the impact of raising interest rates on households and firms. He has urged businesses to contribute to the fight against inflation by cutting prices. McGrath shared this sentiment during his meeting with ECB officials in Stockholm, stating that the monetary authorities have to consider the tangible impact of their decisions. Though he does not intend to instruct the ECB’s interest-rate policies, McGrath highlighted the negative effects of continuing to raise interest rates, especially on low-income households and businesses with floating-rate debt instruments. He encouraged companies to lower prices to help alleviate inflation and protect consumers from high interest rates. Analysts expect the ECB to lower their pace of interest-rate increases at the upcoming meeting to assess the effect of 350 basis points of tightening since July 2020.