Trichet signals June interest rate increase

HOMEOWNERS were yesterday given the clearest sign yet that another interest rate increase is on the way.

After the European Central Bank’s governing council meeting in Dublin yesterday, ECB president Jean Claude Trichet warned that “strong vigilance” was required to ensure inflation across the euro area did not spiral out of control. Mr Trichet usually uses the phrase strong vigilance prior to raising interest rates.

A move upwards in June of 0.25% will be the eighth time in just 18 months that the ECB has raised interest rates. A hike of this size will add around €45 a month to the cost of repaying the typical mortgage.