Eurozone rate cut expected

Eurozone interest rates are likely to be trimmed tomorrow when the governing council of the European Central Bank (ECB) meets this week, investors believe.

Expectations of a cut have been priced in on the money markets, leading to the euro falling against the dollar, the International Herald Tribune reports.

The bank is expected to cut the key interest rate from two per cent to 1.5 per cent in response to the continued downturn in the economy of the 16-member bloc.

Such a fall could have an impact on the cost of mortgages in the eurozone, which in turn might make it cheaper to buy property in countries such as France, Spain, Portugal or Italy.

A reduction may also have an effect on the exchange rate between the euro and the pound, although this week might also see a rate reduction in the UK.

If the exchange rate improves, this may also make eurozone property more affordable.

Last month the ECB governing council voted to hold the interest rate at two per cent.
 

Like this? Then share with your friends and colleagues!