Minister for Finance Michael McGrath has sent a strong signal to lenders that he expects them to start putting up interest rates for savers in the coming weeks.
Irish banks have been among the slowest in Europe to pass on the benefits of higher interest rates being charged by the European Central Bank to savers, with political pressure mounting on the issue.
Speaking on RTÉ radio on Friday, Mr McGrath said there had been a steady increase in ECB rates and that it is “undoubtedly the case that the passthrough of that to savers and depositors has been low”.
While Irish lenders have also been slower than many others to pass through rate increases to borrowers, shielding them from some of the effects of the hikes, Mr McGrath said this has been “even lower than it has been for mortgage holders”.
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He said he cannot intervene in the banks’ policy directly but added that while the bank makes commercial decisions, he expects customers to be treated fairly and expects market conditions to influence pricing.
“I would expect over the weeks ahead that we will see increases in the rates of interests being paid on savings and deposits by banks to customers in Ireland and I think that is right and appropriate.”
Mr McGrath said €140 billion of €150 billion in Irish savers’ funds is in overnight accounts earning close to zero per cent, and encouraged savers to move them to higher yielding accounts with a notice or fixed maturity period.
Last Sunday, Minister for Higher Education Simon Harris said Irish banks have been “complete and utter laggards” when it comes to passing on increases in interest rates to savers.
Mr McGrath signalled last week that he intends to extend the bailout-era bank levy in the budget.
Asked whether it would be at a higher rate if banks did not cut better deals for depositors, he again told RTÉ it would be continued but would not be drawn on his budget plans.
Asked whether the National Treasury Management Agency would consider increasing the rates paid on State savings products, Mr McGrath said it was examining the issue and he expected there would be changes announced shortly.
