Friday 16 November 2018

ECB main lending rate remaining 'unchanged to summer'

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Charlie Weston

Charlie Weston

The European Central Bank (ECB) has left its main lending rate unchanged, but warned that a rise is coming.

Higher ECB base rates will make it more expensive for those with tracker and variable rate mortgages.

The expected rate rise has prompted large numbers of mortgage holders to opt for a fixed rate, but the ECB made no change to its policy guidance on interest, first formulated in June and kept broadly unchanged through several meetings.

"The Governing Council expects the key ECB interest rates to remain at their present levels at least through the summer of 2019, and in any case for as long as necessary," it said.

With inflation rebounding and growth on a five-year run, the ECB has been removing stimulus for much of this year.

This is despite more recent growth indicators appearing to show that the expansion of the European economy is running out of steam and risks to the outlook are mounting.

ECB President Mario Draghi said: "We continue to expect interest rates to remain at their present levels at least through the summer of 2019, and in any case for as long as necessary to ensure continued sustained convergence of inflation to our objective."

People on trackers have been advised by financial experts to stay on those rates. The most recent Central Bank figures show more people are locking in to fixed mortgages than at any time in the past 15 years.

Silence

Meanwhile, farmers have criticised what they claim is a "deafening silence" from the regulator and the Government over what they say are excessive interest rates being charged by banks.

President of the Irish Creamery Milk Suppliers Association (ICMSA) Pat McCormack said banks here were "pillaging" by charging farmers multiples of what is being charged in other European Union countries.

Mr McCormack used his position as a board member of the European Milk Board to find out what farmers in other EU countries are charged. Farmers here are typically charged 5pc to 5.5pc for secured loans, and 6-7pc for unsecured borrowings. German farmers are charged 1-1.8pc and in France rates between 2-2.8pc are typical.

The differences in the interest rates were "jaw-dropping", he said.

Irish Independent

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