| 15.9°C Belfast

Eurozone bank cuts interest rate

The European Central Bank has bowed to pressure and delivered a 0.25% interest rate cut.

The move comes following a fall in inflation in the eurozone to a three-year low while record unemployment had increased pressure on the ECB to deliver a cut in interest rates.

Annual inflation in the 17 countries that use the euro dipped to 1.2% in April. This was the lowest since February 2010 and compares with 1.7% a month earlier, according to the European Union's statistics office in Luxembourg.

The rate has been below the ECB's 2% ceiling since February. March's jobless rate in the eurozone rose to 12.1%, highest since the data series began in 1995.

The Frankfurt-based ECB sees inflation being subdued this year and next. A reduction in rates piles pressure on banks to resist another hike in variable rates. Experts said that is why AIB, EBS and Haven pre-empted the likely ECB rate cut by hiking variable rates from June by up to 0.4%.

ECB president Mario Draghi last month signalled that the ECB stood ready to cut interest rates, warning that the economic downturn had spread into parts of the eurozone previously spared.

Weekly Business Digest

Margaret Canning’s selection of the must-read business stories straight to your inbox every Tuesday morning

This field is required


Privacy