ECB cuts rate by another 0.25%

ECB cuts rate by another 0.25%

The European Central Bank has cut its key interest rate by a quarter of a percentage point to 1% to help the euro zone economy as it slides toward recession because of the debt crisis.

The bank last cut rates only five weeks ago on November 3.

Permanent TSB had said it will pass on the 25 basis point rate cut to its variable rate mortgage customers.

The ECB’s new president, Mario Draghi, has said the euro zone economy could be heading for a mild recession. The cut will promote economic growth and business optimism that policymakers are tackling the crisis.

A slowing economy would only make it harder for European governments to pay down debt.

A 25 basis point cut would see the average tracker mortgage fall by about €700 a year. For every quarter of a point the bank lowers rates, the monthly cost of a €100,000 mortgage falls by about €15.

Banks have to pass the cuts on to tracker mortgage holders, but those on standard variable rate mortgages will have to wait and see if their lenders pass the cut on.

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