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Bank chief: Bailout interest rate will fall


Rate claim: Central Bank governor Patrick Honohan

Rate claim: Central Bank governor Patrick Honohan

Peter Morrison

Rate claim: Central Bank governor Patrick Honohan

The Republic's Central Bank governor Patrick Honohan expects the interest rate on the €67.5bn (£58.5bn) EU/IMF loans to Ireland will be reduced "in due course."

And he has predicted that bond market conditions will improve - on the same day that the Irish government "categorically" ruled out the possibility of a second bailout next year.

Debt market conditions are now worse than when Ireland signed up to the EU/IMF loan late last year.

"Market conditions now are worse than they were then, but market conditions will improve," Mr Honohan said launching the Central Bank's annual report yesterday.

The Irish government "will go back into the markets just as soon as it judges that's the right thing to do".

Finance minister Michael Noonan said yesterday that there's "no question" of Ireland needing a second bailout package next year.

His comments came after a weekend interview in which transport minister Leo Varadkar said that Ireland was "very unlikely" to re-enter the markets next year, as set out in the bailout plan.

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Mr Noonan added that Mr Varadkar's comments were "reasonable" in the context of raising private finance for state projects, he said the aid programme did not require a "full" return to the markets next year.

The Central Bank made a profit of €840.9m (£729.3m) last year, €671m (£581m) of which will be paid to the exchequer. But the figures were lower than those of 2009, when it made profits of €933.8m (£809m).

Professor Honohan also added that he did not expect any major surprises from the results of stress tests on the nationalised Anglo Irish Bank and Irish Nationwide which are due to be released today.