Interest rates expected to hit 3% in 2006

Interest rates are expected to rise to about 3% by the end of 2006, but economic forecasters have said that it will be a good year for the economy.

The Irish economy is predicted to grow by up to 6% and house prices will continue to rise, reflecting the strength of employment growth and wage increases.

Bank of Ireland economist Dan McLaughlin said: “The downside of the very strong economic performance in Ireland and also better economic performance in Europe would be that anyone borrowing money on a variable interest rate will have to pay a little bit more as the year unfolds.”