THE CHIEF EXECUTIVE of the National Treasury Management Agency has said the low level of inflation in the Eurozone is “clearly a cause for concern”.
Speaking last night, John Corrigan said “the low rate of inflation in the eurozone at the moment, which is running well below the 2 per cent target set by the European Central Bank, is clearly a cause for concern”.
He said that a higher rate of inflation would help Ireland’s debt sustainability.
Corrigan also said that he believed the president of the German central bank, Jens Weidmann, would support some form of Quantitative Easing (QE) by the European Central Bank.
“It’s interesting that Mr Weidmann,who is Mrs Merkel’s representative on earth at the ECB…clearly has moved into the camp which says this (QE) is an inevitability.”
Corrigan was speaking as he delivered the annual Certified Public Accountants Ireland business lecture in Dublin last night.
He went on to say that he saw no reason to increase the rate at which the government is selling bonds issued as part of last year’s promissory note deal should be increased unless the economic recovery gathers pace.
His words come after reported pressure from the ECB to increase the rate at which the bonds are to be sold.
“There is a clear schedule there which the Central Bank and the ECB have committed to. That schedule will not be departed from unless things are significantly improved.”
Corrigan also said he thought ratings agencies will hold off until the budget before considering another change to Ireland’s debt ratings.
In an implicit criticism of the ratings agency Moody’s, which did not mark up Ireland’s debt rating until after it had exited the bailout programme and returned to the international money markets, Corrigan said the agency “delayed on the way down and on the way up too”.
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