Threat of first interest rate increase may recede for three years

The first hike in interest rates may be longer away than thought as the ECB holds off for almost a further three years despite the eurozone expanding at a fast clip, a leading economist has predicted.

Philip O’Sullivan, chief economist at Investec Ireland, also raised his outlook for the Irish economy over the next two years, saying that population growth will give an additional spurt to growth here.

The threat of a hike in interest rates that could undermine consumer spending by increasing servicing costs on mortgages, which many markets predict will happen by late 2019, could even recede into 2020 based on recent comments by ECB president Mario Draghi, Mr O’Sullivan said.