Good news for homeowners as ECB stalls interest rate hikes
Millions of Irish homeowners got a reprieve today after the European Central Bank voted to keep interest rates at historic lows.
The move was widely anticipated as the eurozone struggles with a debt mountain and consumer confidence is low.
Outgoing ECB president Jean Claude Trichet also hinted today that interest rates would be left at the 1.5pc rate although investors have already factored in a cut.
Although eurozone inflation stood at 2.5pc last month - above the ECB target of 2pc or just below - the concerns about growth and stock market slumps are overshadowing the figure.
Mr Trichet said that threat to the euro region’s economy have “intensified” while inflation risks are easing making it easier for the ECB to hold or even decrease interest rates.
Many leading economists are calling on the ECB to cut rates although it is not anticipated that Mr Trichet will head up a u-turn just before he steps down as president – rates were increased as recently as July.
But sine that increase, the debt crisis which has hit countries like Greece, Portugal and Ireland has intensified and forced the bank to buy Italian and Spanish bonds last week.
The European economy faces “particularly high uncertainty and intensified downside risks,” Mr Trichet said at a press conference in Frankfurt
The 23-member governing council had planned to raise rates by 0.25pc this autumn but weak economic data from Europe and the US has resulted in this policy being reviewed.
Investors are already factoring in a cut in rates from 1.5pc as early as the end of this year but economists believe there is an outside chance that this would happen.
Earlier today Britain kept its interests rates unchanged while the US recently announced that it will maintain interest rates at lows until mid-2013.