Interest rate rise on the way, says BoI

A HIKE in interest rates is on the cards by the end of this year as the European Central Bank (ECB) seeks to soothe inflation.

According to Bank of Ireland economists, the ECB will be looking to reduce inflation to 2% and will be concerned about the impact on prices from soaring oil costs and mortgage lending growth.

“A necessary condition for the ECB to raise interest rates is that the economy returns to growth in excess of its longer-term trend rate of 2%-2.5%. It is moving in that direction, though some uncertainty remains over how quickly it will get there,” BoI senior economist Michael Crowley said yesterday.