Bank of Ireland reduces deposit rates following ECB cuts

ECB is expected to continue reducing its key deposit rate throughout the course of 2025

No other savings products are affected, Bank of Ireland noted, with its top rate of 3% on its supersaver product, applicable for the first 12 months after setting up such an account, remaining. Picture Colin Keegan, Collins Dublin

Bank of Ireland has announced it will cut rates on certain deposit products, marking its first such response to the European Central Bank's (ECB) reduction to borrowing costs last June.

The lender said on Tuesday that it is reducing the interest rate on its 12 and 18-month fixed-term deposits by a quarter of a percentage point from Friday. 

Bank of Ireland's 12-month rate will therefore fall to 2.25%, while the annual rate on the 18-month product will decline to 2.73%.

No other savings products are affected, Bank of Ireland noted, with its top rate of 3% on its supersaver product, applicable for the first 12 months after setting up such an account, remaining in place.

“Customers who are already in the process of opening a 12 or 18-month term deposit account can still avail of the existing rates if they open their account by 8 January,” the bank said.

"The interest rate for the Advantage 6-month fixed-term deposit will not change on 9 January."

The ECB has cut its key deposit rate by a total of one percentage point across four meetings to 3% and is expected to continue on this trajectory over the course of 2025. 

Ireland's pillar banks have lagged significantly behind their European peers in passing on deposit rate increases, despite the ECB increasing key rates by 4.5 percentage points between July 2022 and September 2023.

With Irish banks offering some of the lowest deposit rates in the 20-country Eurozone, this has resulted in savers effectively subsidising those borrowing as banks were also slow to increase mortgage rates.