McGrath notes interest rates may have reached a peak, but 'there are no guarantees'
Earlier this week, the ECB said the overall economic outlook had weakened and the balance sheets of eurozone banks remained vulnerable following a rise in loan defaults and late payments. Picture: Gareth Chaney/ Collins
Finance Minister Michael McGrath noted financial markets are indicating the European Central Bank have hit a peak with interest rate hikes, but added additional increases could not be ruled out.
Mr McGrath’s comments come as ECB policymakers gave mixed signals about rate hikes versus rate cuts.
“The markets generally believe that we are at the top of the interest rate cycle but there are no guarantees. There’s a lot of uncertainty there,” said Mr McGrath.
Mr McGrath also said the markets predict rate reductions will begin in the first half of 2024, “but we can’t be assured of that and it is ultimately a matter independently for the ECB as the monetary policy authority”.
Earlier this week, the ECB said the overall economic outlook had weakened and the balance sheets of eurozone banks remained vulnerable following a rise in loan defaults and late payments.
“The asset quality of euro area banks remains robust, but default rates and payment arrears are showing early signs of stress,” the ECB warned in its twice-yearly Financial Stability Review.
Meanwhile, Germany’s business outlook improved for a third month in November, pointing to an impending recovery for an economy that is probably in a recession and beset by a budget crisis.
• Additional reporting by Bloomberg
