ECB OFFICIALS ARE due to meet today, with most observers believing the bank will row back on its policy of increasing interest rates.
The eurozone key interest rate is currently at 1.5 per cent after two consecutive rises this year as members of the ECB governing council sought to dampen down inflation in Europe’s top-performing economies. However, growing fears over the deepening Euro debt crisis are expected to mean the bank will not increase the rate this time, according to 57 economic analysts surveyed by Bloomberg.
Holding the rate steady would be good news for Irish homeowners, who would not then face a rise in their repayments. Tracker mortgages are directly linked to the ECB central rate, while variable-rate mortgages are set by individual banks but heavily influenced by the ECB rate.
Meanwhile, the Financial Times reports that the key rate could even be cut at the ECB’s next meeting in November. Financial market analysts believe the rate will come down by 0.25 per cent after ECB president Jean-Claude Trichet hinted at a change in strategy. Previously, the ECB has focused on controlling inflation – which has a negative effect in EU economies which are not performing as strongly, such as Ireland.
Last week Goodbody Stockbrokers predicted that the ECB would slash its rates by up to half a percentage point over the coming year in a bid to spur economic growth across the Eurozone.
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