Taoiseach Leo Varadkar has said that the banks “can’t have it both ways” and must examine interest on savings as mortgage rates go up.
He made the comments after the European Central Bank (ECB) confirmed that it was increasing interest rates by 0.5%.
This is the sixth time that rates have been increased in the last year as it attempts to tackle inflation.
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Speaking in Washington DC, Mr Varadkar ruled out reintroducing mortgage interest relief to help Irish customers who are facing higher mortgage payments in the coming weeks and months.
However, the Taoiseach said that banks must give back to customers as well as take.
“It wasn’t a surprise that the ECB was going to put interest rates again,” he admitted.
“It is independent [and] makes its decisions without approval from EU Governments.
“I do understand why they’re doing it. We shouldn’t forget that the reason why the ECB is putting up interest rates is to bring inflation down and to get inflation under control and that will benefit everyone.
“But obviously, I'm very conscious that for mortgage holders and for other lenders, they're gonna see a further increase in repayments and that's unwelcome.
“But one thing I would say certainly to the banks is that they can't have it both ways.
“They can't be putting up interest rates for people who are borrowing and for people who have mortgages.
“There's a huge amount of savings on deposit in Irish banks. Never more than was the case. Particularly older people who have household savings and other people's savings for other reasons.
“Surely the interest rates and the returns they get should be going up as well. The banks can't have it both ways when it comes to things like this.”
The Central Statistics Office (CSO) confirmed that inflation had risen to 8.5% in February, up from 7.8% in January.
The largest increases were a 26% rise in housing, water, electricity, gas and other fuels and a 13.1% rise in food and non-alcoholic beverages.
Mr Varadkar previously said that he believed inflation could have peaked but warned that prices of goods could remain high.
When asked if the Government would introduce further measures to help consumers struggling with rising costs, Mr Varadkar said that the Government had previously introduced measures.
He said: “We still anticipate that inflation is going to fall through the course of the year. Some of that will be a base effect, but we anticipate that inflation is going to fall throughout the course of the year.
“What we've announced already will be implemented. That's the additional energy credit coming off people's bills at the moment and also the extra payments for child benefit for pensioners and others. So all of that will continue.”
Asked if he was worried that inflation would continue to rise, Mr Varadkar said that he would never judge inflation off a single month’s figures.
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