Top economists at some of the world’s leading banks have predicted that the ECB rates will hit a record low of 0.5% by the middle of 2012.
The prediction was made by economists from US banks Merrill Lynch, JPMorgan Chase and Citibank, as well as Britain’s Barclays Capital.
The news will be a boost for homeowners currently struggling with mortgages, with every 0.25% the ECB cuts from their rates equating to a saving of €30 for those with a €200,000 tracker mortgage.
Those on tracker mortgages, which automatically benefit from ECB rate cuts, have benefitted from rate cuts in November and December of last year.
It had been expected that a third successive cut would be made when the European Central Bank meets for the first time this year on Thursday. However, that is not now expected to happen, with experts predicting that the ECB will hold off until February or March before cutting rates before the current level of 1% for the first time in its history.
Explaining the reason for the wait, Bloxham's Alan McQuaid said he expected central bankers to wait a month or two before cutting rates again.
He said the ECB was anxious to monitor the impact of December's reduction in rates before moving again.
A survey of 51 economists across Europe conducted by the Bloomberg news agency also found that most expect rates to stay at 1% this month.
However, short term pain could be worth the long term gain with rates expected to fall twice more between now and the summer.
Any further reduction to interest rates would be a massive boost to the more than 400,000 homeowners on tracker mortgages, who automatically benefit from ECB rate cuts.
Another 255,000 with variable rates will be hoping their lender passes on any cut.
A cut would bring relief to most Irish mortgage holders, as eight out of 10 are either on trackers or variable rates.
