If we were not on the doorstep of EMU, our interest rates would now be higher. Wholesale interest rates must converge, among the countries participating in EMU, by January 1999. This points to the expectation of reductions in Irish rates, even if European rates were to move upwards further in the meantime. I cannot quantify reductions precisely nor can I outline a timepath.
As the testing backlog clears, car production should return to normal by the end of the year and the effect on output should dissipate.1 The latest data already show production normalising. The second source of the slowdown has been weaker trade growth, which is broader-based.