BRITISH interest rates were cut by a quarter of a point yesterday but analysts said that the reduction was unlikely to affect Irish rates.
British rates are now further below those prevailing in the Republic after the Bank of England cut base rates by 0.25 of a point to 6 per cent. The Irish short-term facility (STF) set by the Central Bank is currently at 6.5 per cent.
Mr John Beggs, chief economist at AIB Group Treasury, said the British move had very little impact because it had long been anticipated by the market. "Any move the Bundesbank makes is more important. It is falls in the bond markets worldwide which are more likely to trigger cuts," he said. The pound was steady on the day. It closed at around 102.75p.
Analysts here said the British cut reinforces what remains a very friendly environment for European interest rates. "It's very good for sentiment and does show the trend across Europe is still in a downward direction," one economist said.
The move sparked a bitter price war among Britain's top home loan groups as lenders trimmed interest rates. National Westminster Bank, Barclays Bank, the Midland Bank, Citibank, the Royal Bank of Scotland and Lloyds TSB Group all followed the Bank of England.
Vying for new customers amid a slumping property market, Britain's biggest home loans group, the Halifax Building Society, said it was cutting its core interest rate by 0.24 percentage points to 7.25 per cent.
