Belfast Telegraph

Dublin not fazed by European Central Bank bonds move

By Colm Kelpie

Any negative impacts from the winding down of the European Central Bank's massive bond buying programme will be limited, a high-level Irish Government group has said.

That's despite a risk assessment published last summer by the Irish Government in which it claimed an end to quantitative easing could push up borrowing costs given the scale of the Republic's public debt.

But the Financial Stability Group, which is made up of senior officials including the head of the Department of Finance, the NTMA and Central Bank governor Philip Lane, has looked at the effects of higher interest rates due to QE tapering, and the potential effect on asset prices, and believes there will be a limited impact, assuming the process is "orderly".

The Irish Department of Finance also believes that a one percentage point rise in interest rates by the ECB would cut GDP in the Republic by 1% after five years, while employment would be 0.7% lower.

The ECB announced in October it was going to cut its massive bond-buying programme to €30bn a month from €60bn, as of January.

Belfast Telegraph

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