The head of the International Monetary Fund, Ms. Christine Lagarge said that the ECB should cut interest rates further and strong economies such as Germany should allow higher inflation and wage growth.

Christine Lagarde

Speaking in Dublin, Ms. Lagarde said that “monetary policy should remain accommodative, and we believe that there is still some limited room for the ECB to cut rates further,”

“Restoring a sense of balance means lower inflation and wage growth in the south [of the euro zone], but it also might mean allowing somewhat higher inflation and wage growth in countries like Germany. This too is an aspect of pan European solidarity,” she added.

There are approximately 400,000 tracker mortgages in Ireland where any reduction in ECB rates would be immediately felt through lower monthly repayments.

On mortgage arrears, Ms Lagarde said the IMF is not pushing for repossessions of properties where loans are in difficulty. But it is pushing for certainty on the terms and conditions of repayments, she added.

In the latest report from the Irish Central Bank, 94,488 residential mortgages are now in arrears, which equal just fewer than 12% of all residential mortgages. Separately, about 18% of investor mortgages are in arrears.