Worldwide Rate Cut Eases Irish Finances

As world markets continue to tip-toe along the precipice of collapse, a world-wide rate cut has been put in place to put some distance between world finances and the edge.

On Wednesday morning, the U.S. Federal Reserve led a round of interest rate drops by a half a point reduction, as did the European Central Bank, Bank of England and Swiss, Canadian and Swedish banks.

Economists often use interest rates during economic downturns to re-energise markets and stimulate recovery.

The move has so far significantly boosted markets around the world with the index of top European shares down by 0.2% at 1,001.74 points, compared with losses of around 4% before the central bank move at 7:00am.

Fine Gael Enterprise Spokesman Leo Varadkar said however, that the rate cut must be passed on to homeowners in full.

He said: "This co-ordinated interest rate cut from the ECB, the US Federal Reserve and the Bank of England is very welcome and will provide much-needed relief to hard-pressed homeowners.

"However, it is essential that the new rate is passed on to homeowners as soon as possible, as homeowners with an average €250,000 variable rate mortgage would benefit by €105 a month.

He said banks would be saving €1.3 million for every day they fail to pass on the lower rate."

It is hoped that combined with the government's 'stabilising' move last week, guaranteeing bank assets, Ireland's low house prices could reinvigorate the housing market and speed the country's recovery.

(DW)