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Continued relief for mortgage holders: ECB keeps rates at record low

Mario Draghi says the eurozone economy should stabilise over the rest of the year, but low rates are still needed for now.

Image: Michael Probst/AP

THERE IS GOOD NEWS for an estimated 375,000 Irish mortgage holders today, as the European Central Bank kept its main interest rates at record lows.

The Frankfurt-based bank decided today it would keep the low benchmark interest rate of 0.5 per cent, introduced last month, for at least another four weeks.

The decision to maintain the low rates means the holders of tracker mortgages will see their repayments remain at record low levels for at least the next month.

The continued low rates come as inflation continues to remain low throughout the countries that use the single currency.

The cost of living is expected to rise by an average of 1.4 per cent this year, and 1.3 per cent next year – well below the 2.0 per cent that the ECB usually aims for.

ECB president Mario Draghi said that the 17-member eurozone was likely to see a mild economic recovery later this year.

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However, the ECB’s projections still indicate an expected contraction in the European economy this year – and the bank today reduced its expectations for growth in 2013 from -0.5 to -0.6 per cent.

Draghi added that recent surveys of economic optimism had shown improvement and the economy “should stabilise and recover in the course of the year.”

The ECB expects the eurozone, which will expand to 18 countries with the membership of Latvia from next January, to grow by 1.1 per cent in 2014 – a slight increase from the 1.0 per cent that had previously been expected.

Read: ‘Blockupy’ protestors block access to ECB headquarters in Frankfurt

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Gavan Reilly

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