ECB lifts key rate by quarter-point
Thursday, 8 March 2007 13:05
The European Central Bank has raised its main interest rate by a quarter of a percentage point to 3.75% after its meeting in Frankfurt today. The move was widely expected.
The last time ECB interest rates stood at 3.75% was in September 2001. The bank has now raised its key rate seven times since December 2005, each time by a quarter of a percentage point. The last move was on December 7.
Top ECB officials, including president Jean-Claude Trichet, had carefully prepared financial markets for the interest rate move. They have signalled that the bank remains worried about risks from inflation.
AdvertisementBanks and others lenders are now expected to now fully pass on the rate rise to mortgage borrowers. It will add about â‚¬15 to monthly mortgage repayments for every â‚¬100,000 newly borrowed.
Added to the the other six increases announced since December 2005, it means that in just 15 months mortgage borrowing costs will have risen by â‚¬105 a month for every â‚¬100,000 borrowed.
Unfortunately for mortgage holders and house-buyers, economists are expecting that the ECB may have to raise interest rates further in the months ahead.
Halifax has increased its monthly saver account rate by 0.35% to 7.00%, which betters the 0.25% ECB rate increase today.
The bank says it is the best interest rate available in Ireland, and promise it will stay at least 1.5% above the ECB base rate until January next year.