Irish lenders cut interest rates

Two of the nation's lending institutions have surprisingly cut the cost of borrowing.

The move comes after the European Central Bank's (ECB) earlier announcement today to cut the interest rate by 0.5% to 3.25%.

Both AIB, Ireland's biggest bank, and First Active Building society have reduced their interest rate by 0.5% . AIB's variable mortgage is to fall to 4.25% and First Active's will fall to 4.75%, both from next week.

The reduction should save borrowers around £14 a month on a £50,000 mortgage. The surprise 0.5% reduction by the ECB is reported to be timely and will help the alleged slowing Irish economy.

However, Tanaiste, Mary Harney has said she strongly disagrees with Central Bank governor, Maurice O' Connell who claims the Celtic Tiger economy is at an end, adding some people are talking the country into recession.

Ms Harney says that despite the recent multiple redundancies around the country, Ireland's economy is sound and we should not expect a return to the bad days of economic depression.

It was expected that the ECB would only reduce its rate by 0.25% having already reduced interests rates three time this year.