Simmering hopes that the European Central Bank would again cut interest rates were dashed today as Mario Draghi and his team chose to leave interest rates unchanged.
There are about 400,000 residential mortgage holders in Ireland where the rate of interest they pay is directly linked to the ECB, these are called ‘tracker’ mortgages. Any cut in interest rates by the ECB would have an immediate impact on monthly mortgage repayments.
The Euro area has suffered extremely low levels of inflation in recent months which has begun to concern economy watchers. Low inflation signals low economic activity which the ECB is keen to avoid.
While Mr. Draghi and his ECB team have led a successful campaign to stabilise the euro, there is a growing fear that economic recovery within the euro area is stalling.
Despite concerns about the health of the wider euro economics, the good news for Ireland is its traditional export markets in the US and UK are on the rebound with signs of strong economic recovery continuing through the rest of 2014. So even if the ECB may have disappointed today, signs that our traditional export markets are rebounding strongly should serve as more than a silver lining.