Saturday 29 November 2014

Government’s cost of borrowing falls to all time low

Published 25/08/2014 | 12:26

Mario Draghi, president of the European Central Bank (ECB)
Mario Draghi, president of the European Central Bank (ECB)

The Irish Government’s cost of borrowing on the markets has fallen to an all time low, as investors bet that the European Central Bank plans to buy up masses of bonds.

The price paid on the markets for all European government bonds surged, pushing yields from Germany to Ireland and Spain down to records, after ECB  President Mario Draghi gave his strongest signal yet that officials are moving closer to so called quantitative easing (QE).

The interest rate on 10-year Irish Government bonds dropped to barely more than 1.8pc. That compares to interest rates of as much as 5pc being paid under the bailout.

Bond yields falls as the demand for the bonds themselves go up. Investors are clamouring to think the ECB is increasingly likely to spend billions in a desperate attempt to drag the euro area economy bank from the brink of a new slump.

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