WITH Dublin wholesale market interest rates continuing to indicate higher bank and building society rates, all eyes will today be on Frankfurt to see if the Bundesbank reduces its key money market rate. Many analysts expect a small reduction in the repo rate - the rate at which the Bundesbank supplies funds to the money market. However this may not be enough to remove the pressure from Irish interest rates.

On the Dublin money market, the key one month rate remained above 5.5 per cent yesterday. At this level, an increase in retail interest rates is still indicated.

An unexpected sudden improvement in the German business climate slightly damped down hopes of a German interest rate cut. The evolution came with publication yesterday by the influential Ifo institute of its monthly survey of German business leaders' state of mind, showing that their mood improved markedly in July.