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Ireland's cost of borrowing at record low

The Government's cost of borrowing on the markets has fallen to an all time low, as investors bet that the European Central Bank, led by Mario Draghi, 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, 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 fall as the demand for the bonds themselves go up.

Investors are clamouring as they think the ECB is increasingly likely to spend billions in a desperate attempt to drag the euro area economy back from the brink of a new slump.

Earlier this month, global ratings agency Fitch upgraded Ireland's credit rating as the country's cost of borrowing fell to a new record low yesterday.

Fitch upgraded Ireland last night to A- from BBB+ with a stable outlook. Now two of the three main credit ratings agencies have Ireland in the A category after the upgrade by Standard & Poor's in June.

Finance Minister Michael Noonan said the upgrade reflected the progress that has been made in growing the economy, creating jobs, repairing the banking sector and improving the public finances.

Fitch said Ireland had remained compliant with eurozone and domestic budgetary rules and forecast the deficit would fall below the 4.8pc of GDP target this year.

It also highlighted employment growth and said the economy will grow 2.2pc this year.