ANYONE with a tracker mortgage and those corporate borrowers able to tap the markets at prices based on the official lending rates are enjoying historically low borrowing costs.
The low interest regime has been a welcome respite in an otherwise bleak economic environment, and figures from the European statistics agency show the current situation is unlikely to change soon.
That's because the great global slowdown has kept a firm lid on the price of most goods and services. Even with assets like stocks and real estate now showing significant price rises, the wider inflationary environment remains very depressed.
It's a sign of a weak economy, but at the same time, it is the reason interest rates are likely to remain low.
Among our nearest neighbours, only the UK looks likely to buck that trend in the near term – its stronger recovery is driving prices higher, which could ultimately feed into an interest rate rise. Even there, the official inflation rate is low by historic standards.
For the eurozone as a whole, inflation fell to the lowest level in three-and-a-half years in September.
Here, the ongoing effects of austerity and lower-than-expected growth mean we are seeing no inflation at all, at least not by official measures.
The rate of consumer price inflation in the 17 countries using the euro fell to 1.1pc year-on-year in September, its lowest since February 2010 when it stood at 0.8pc, the EU's statistics office Eurostat said on Wednesday. The reading was down from 1.3pc in August and was well below the European Central Bank's (ECB) official target of an inflation rate of close to, but below 2pc. Prices rose by a half a per cent from August.
Rising energy costs in the UK could mean price hikes here over the winter, but are unlikely to have a major impact on the wider inflationary outlook.
The idea that consumers here are enjoying a low inflation rate will come as a surprise to some people – but the standard consumer price indices don't include some core household costs – including rent or mortgage costs.
Given the ECB's emphasis on the official CPI rate, that can lead to anomalies such as the officially low inflation rates of the 2000s, when the rising price of many assets, including property, had a huge impact on most people's living costs; and when higher borrowing costs could have helped moderate the price bubble before it got out of hand. For now, though, the outlook is for low interest rates into the foreseeable future. Senior ECB figures have noted that inflation pressures in the eurozone look set to remain subdued in the medium term.
A low inflation environment allows the ECB to keep an "ultra-loose" policy stance – meaning it can hold official interest rates at record low levels.
It's good news for anyone with borrowing costs pegged to the official rates.
But that is an increasingly small cohort.
The breakdown in the "transmission" of official interest rates to end borrowers is now a big issue for borrowers.
Many households with a so-called variable rate mortgage have seen their borrowing costs increase in recent years, even though the official rate dropped.
The eurozone has a single official interest rate but small businesses in Ireland cannot access credit at the same price as rivals in Germany, for example. Ironically, that's true even though inflation there is running at a higher rate. (Additional reporting and graphic details - Reuters)