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Relief for homeowners as ECB holds interest rates

Meanwhile, the Bank of England has announced it will inject £75 billion into the UK’s sluggish economy.

Trichet will step aside next month with Mario Draghi from Italy taking over as President of the ECB.
Trichet will step aside next month with Mario Draghi from Italy taking over as President of the ECB.
Image: Virginia Mayo/AP/Press Association Images

MORTGAGE HOLDERS IN Ireland can breathe easier for another month as the European Central Bank decides not to raise its key interest rates.

As expected, the ECB kept rates unchanged at 1.5 per cent following a meeting in Berlin today.

The policymakers have already increased the rates twice this year – both of which led to higher mortgage repayments for homeowners in Ireland.

Following his last meeting as the president of the ECB, Jean-Claude Trichet will hold a press conference on the Governing Council’s decision shortly.

Reuters reports that the central bank will hint at further increases later this year.

As Trichet hands the reins over to Italian central banker Mario Draghi next month, he will not want to leave the whole burden of bad news with him.

The ECB is also considering further liquidity measures, according to Reuters.

Trichet will likely announce bond buying programmes and 12-month lending operations at the press conference.

Earlier today, the Bank of England announced it will inject a further £75 billion into the economy by raising the value of its quantitative easing programme to £275 billion.

The central bank will print the extra cash to buy bonds and other assets over the next four months.

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The last time the programme was added to was in 2009 but the policymakers today said that tensions in the world economy were threatening the UK’s recovery.

“In the light of that shift in the balance of risks, and in order to keep inflation on track to meet the target over the medium term, the committee judged that it was necessary to inject further monetary stimulus into the economy,” the policy committee said in a statement.

The committee also voted to maintain the key interest rate at its record low of 0.5 per cent.

More: ECB to offer emergency loans to Eurozone banks

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