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ECB OFFICIALS ARE due to meet today, with most observers believing the bank will row back on its policy of increasing interest rates.
The eurozone key interest rate is currently at 1.5 per cent after two consecutive rises this year as members of the ECB governing council sought to dampen down inflation in Europe’s top-performing economies. However, growing fears over the deepening Euro debt crisis are expected to mean the bank will not increase the rate this time, according to 57 economic analysts surveyed by Bloomberg.
Holding the rate steady would be good news for Irish homeowners, who would not then face a rise in their repayments. Tracker mortgages are directly linked to the ECB central rate, while variable-rate mortgages are set by individual banks but heavily influenced by the ECB rate.
Meanwhile, the Financial Times reports that the key rate could even be cut at the ECB’s next meeting in November. Financial market analysts believe the rate will come down by 0.25 per cent after ECB president Jean-Claude Trichet hinted at a change in strategy. Previously, the ECB has focused on controlling inflation – which has a negative effect in EU economies which are not performing as strongly, such as Ireland.
Last week Goodbody Stockbrokers predicted that the ECB would slash its rates by up to half a percentage point over the coming year in a bid to spur economic growth across the Eurozone.
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Most people are on variable mortgages.. So if ecb do dlash the rate i doubt it very much that greedy banks will decrease rates..gov own banks and shudv stepped in wit a plan long ago!
i cant take anymore interest rates, i am struggling so bad, my daughter did her 3rd year exams this year, and has got a job for a week so i will pull her out of school, this is crazy for a kid who wants to go to college, i am paying my mortgage, no jobs around tralee, celtic tiger never came here, also we have crap councillors who refuse businesses from opening in tralee, they all end up in killarney, our schools never expanded with the so called celtic tiger ,, which i think was a building boom and we have all the empty buildings to prove it, you should come to tralee its a joke of a town really, i emigrated came back, i could give up my home and not pay mortgage, maybe have money for food and heat, dont know anymore what to do, am on anti depressants already, and see a light at end of tunnel but its a train coming for me,,, our government does not care for the poor people, our banks really dont, and i believe the money gave to our pillar banks for mortgage help has not been touched yet,, and if sean gallagher gets in to term, his pension will cost us 25 million,, only vote in old people so we dont have to pay that out also,,,, we are in debt but our government still living it up,, give them 200 a month to pay for mortgage, food, heat, mortgage insurance, house insurance ,, see how they live,, but if i give up they will have to house us and my mortgage is only small, and ten years left but i cant see how i can live like this anymore, i cant answer my door or phone so just sit and stay quiet in my own home till after 6 when i know they wont bother me anymore, this is not living due to our bankers and government and what do they do , nothing,, my eyesight failing, my teeth breaking, my hearing going, malnutrition alive and well in ireland,, get out and try your best to get your kids out,,, and dont get married as you will be looked after by government, and dont buy a house as then you can get rent relief,, sorry for doing all the right things and now feel so so punished
About time the ECB looked beyond just controlling inflation. After all the excessively low rates are one of the causes of the bubble in the first place
The rates were excessively low to suite Germany over the years, the rate hikes are paused to suit Germany. The needs of other countries do not come in to it. For a lot of Europe, it is welcome to permaslump. Locked in to a currency and rate cycle that hammers them and prevents a return to growth. Power and wealth flow to the centre. What happened to the West of Ireland, the South of Italy, the North of England, the south of France etc etc will happen in the next few decades to countries. We’ll be one of them but hey long as there are jobs in Brussels for the boys and girls there will be no shortage of people here to go along with it.
If the ECB cuts rates in future, I would not be optimistic about variable rate mortgage holders benefiting.
True, governments can reduce the rate of interest in the short run. They can issue additional paper money. They can open the way to credit expansion by the banks. They can thus create an artificial boom and the appearance of prosperity. But such a boom is bound to collapse soon or late and to bring about a depression.
Ludwig von Mises (Omnipotent Government)
You’re spot on Tony.
It’s often not realised how damaging inappropriate interest rates have been to the Irish economy and how damaging they will continue to be while we’re locked into the Euro.
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