AIB has announced a 0.25 per cent interest rate cut to its variable rate mortgages.
In a statement issued this evening, Allied Irish Bank said its board had come to the decision following yesterday's meeting with the Government and the Economic Management Council.
The bank had come under pressure to pass on last week's ECB interest rate cut of 0.25 per cent.
The Government tonight welcomed the announcement. "AIB did not impose the last two ECB interest rate increases and this latest move by the bank is to be welcomed," it said in a statement.
Speaking earlier today, Tánaiste Eamon Gilmore said banks that refuse to pass on the European Central Bank interest rate reduction to mortgage holders should “reconsider their position” or face the possibility of legislation forcing them to do so.
The Government is awaiting a response on the issue from financial regulator Matthew Elderfield. Taoiseach Enda Kenny asked Mr Elderfield yesterday to assess the issue following a meeting with the country's three main banks and their rebuffal of the Government’s efforts to get them to lower interest rates.
Yesterday's meeting with senior executives from Bank of Ireland, AIB and Ulster Bank was described as "tense" and "frosty".
“At the end of three separate meetings with each of the banks, I called them all together and asked them in respect of the passing on of the mortgage interest rate reduction for mortgages – all three banks declined", Mr Kenny said afterwards.
The focus will now shift to Bank of Ireland and Ulster Bank who have as yet not agreed to pass on the rate reduction.