Personal Finance

Tuesday 22 July 2014

ECB rules out interest cut but low rates to stay

Tracker mortgage holders may have seen last of interest rate cuts in recent years

Published 28/01/2014|02:30

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European Central Bank  President Mario Draghi
European Central Bank President Mario Draghi

TRACKER mortgage holders may have seen the last of the interest rate cuts that significantly eased their repayments in recent years, writes Charlie Weston.

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Head of the European Central Bank Mario Draghi has dashed hopes of another reduction in rates.

But the good news is that rates are unlikely to rise for at least a year and a half.

Pressure for another cut in European Central Bank interest rates had been building as inflation in the eurozone has fallen to a record low, prompting fears of damaging deflation where prices keep falling.

Economic growth in the currency has also been insipid, leading to calls for a new reduction in interest rates. But Mr Draghi insists there are signs emerging of a dramatic improvement in the health of the European economy and played down fears of deflation in the eurozone.

This means there is no need for a new cut in rates.

The ECB surprised the markets when it reduced its core interest rate last November.

About 375,000 holders of tracker mortgages gained from that move, with a saving of about €30 a month for a mortgage holder with a €250,000 home loan.

Irish Independent

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