In this article from Jim Power Economics about interest rate trends we can see that the ECB’s target for inflation is set at 2%. The Federal reserve in the USA has already begun to raise interest rates. Another rise of 0.25% puts it at 2% rising from 0% in December 2015.

The contrast in Europe is that interest rate normalisation has not yet begun. The ECB has a target of 2% for inflation. Although this rose in the Summer from 1.2% to 1.9%, the rising cost of energy costs was the key factor here.

The ECB left its key interest rate unchanged at zero. However, Quantitative Easing ( the monthly bond buying programme) will remain at its monthly rate of €30 billion until the end of September, and this will  be reduced to €15 billion per month and will then end. The ECB currently believes that rates will remain at current levels at least through to Summer 2019.

This is all predicated on growth continuing at current levels and inflation gradually converging towards 2%. Although circumstances can change, but for the moment the ECB is quite relaxed about it.

Irish borrowers and tracker mortgage holders can remain relaxed at the moment as there is no change in interest rates just yet. But this will eventually end. The question is when? Let’s see what happens in 2019.