In their response to a parliamentary question submitted by MP Yves Cruchten from the Luxembourg Socialist Workers’ Party (LSAP), the two ministers stressed that the comprehensive analysis of price fluctuations encompasses various economic facets and extends beyond solely national consumer prices.
Notably, the import price surges in 2022 and Luxembourg’s substantial salary contributions - surpassing those within the Eurozone - were pivotal factors. Both Fayot and Backes emphasised that the data presented were provisional and largely reliant on estimations.
Shifting attention to the financial sector, the ministers expounded on the Financial Sector Supervisory Commission’s (CSSF) rationale for the 66% margin surge observed in the first quarter compared to the same period last year. The CSSF attributes this increase to the overarching increase in interest rates. However, the ministers also pointed out that this surge has to be contextualised within a broader timeframe, as the last 15 years had witnessed record-low bank yields in Luxembourg. The subsequent exacerbation of this trend by the Covid-19 pandemic and geopolitical tensions further complicated the situation.
Both ministers highlighted the vigilant stance of the European Central Bank toward bank yields. This vigilance is aimed at safeguarding the resilience and stability of the Eurozone’s banking system. Although a majority of Eurozone banks reaped benefits from augmented margins, the ministers stressed the prevailing uncertainties in yield prospects.
