The ECB now has significant room for manoeuvre - it has increased interest rates to record highs and thus can now reduce them by a significant amount, while still continuing to fight inflationLooking downwards: European Central Bank President Christine Lagarde is expected to announce an interest rate cut after next week's meeting of the bank's governing council.
The ECB now has significant room for manoeuvre. It has increased interest rates to record highs and thus can now reduce them by a significant amount, while still continuing to fight inflation. This should give the members of its governing council some comfort as they act in response to evidence that the rate of inflation is moving back to the 2 per cent target level.
Tracker mortgage rates will fall immediately and the prospect of lower borrowing costs, along with competitive forces, have already led to some reduction in the fixed rates on offer to new borrowers and those whose current fixed term is running out. Nonetheless, for many, the interest rates they will move on to will be significantly higher. In turn, this raises the risk of some running into difficulties keeping up repayments and falling into mortgage arrears.
In time there should be a further general downward move in interest rates. However, as the banks did not increase most rates to compensate fully for ECB increases, the scope for further downward movement in many fixed rates may be limited enough for now. The deals on offer to borrowers will not return to the levels seen before 2022. But it is time for the ECB to make the first move and start reducing borrowing costs .
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Source: IrishTimes - 🏆 3. / 98 Read more »