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Dublin: 9°C Monday 23 May 2022

ECB holds main eurozone interest rate at 1 per cent

The decision follows two successive months of cutting the bank’s main interest rate which was a welcome boost for mortgage holders.

ECB president Mario Draghi
ECB president Mario Draghi
Image: Virginia Mayo/AP/Press Association Images

THE EUROPEAN CENTRAL Bank has announced that its main interest rate will stay at 1 per cent after two successive months of cuts to the rate which can affect the amount of interest homeowners pay on their mortgage.

The bank’s governing council met in Frankfurt today where it was decided, as was widely expected, that the main interest rate would remain at 1 per cent.

President Mario Draghi had imposed two successive cuts in his first weeks in the role. The interest rate was cut by 0.25 per cent last November and by the same amount again in December. Draghi is due to explain the reasons behind the bank’s decisions at a press conference later today.

Earlier this morning, the Bank of England kept its main interest rate unchanged at 0.5 per cent.

Successive cuts to the main interest rate had led to pressure on the banks to pass on the cuts to mortgage holders on a standard variable rate mortgage. While some banks, such as EBS and Permanent TSB, did pass on the last cut others – AIB and Ulster Bank – did not despite political pressure.

European banks borrow from ECB – and then lodge the cash with the ECB again

About the author:

Hugh O'Connell

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