ECB Expected to Cut Interest Rates by 0.25% Today
The European Central Bank (ECB) is widely anticipated to reduce interest rates by 0.25% today, bringing rates down from 3.25% to 3%. This would mark the ECB’s fourth rate cut this year, responding to moderating inflation and concerns over sluggish economic growth in the eurozone.
Impact on Borrowers and Savers
A rate cut would provide immediate relief to tracker mortgage customers. For borrowers with 15 years remaining on their mortgage, the reduction translates to a €13 monthly savings per €100,000 borrowed.
However, the move will negatively affect savers, as lower rates lead to reduced returns on deposits.
Mortgage Market Trends
Ireland’s average new mortgage rates currently stand at 4.03%, the sixth-highest in the eurozone. Most rate reductions are occurring in fixed-rate mortgages, where competition is strongest.
Economic Context
The anticipated rate cut comes as inflation eases across the eurozone. However, concerns remain over growth prospects, particularly amid geopolitical uncertainties. Markets are especially wary of potential economic fallout from a possible return of Donald Trump to the White House.
Market Predictions
A recent Reuters poll revealed that 73 of 75 economists predict a 0.25% cut, with only two forecasting a 0.5% reduction. The rate cut, if confirmed, underscores the ECB’s balancing act between stimulating growth and managing inflation in an uncertain global economic climate.