European Central Bank expected to hike rates 'by further 1.25%' before year-end

Neil McDonnell, chief executive of business group Isme, said he hoped the banks here wouldn't pass on the ECB hike, adding lenders had the "headroom" to absorb some or all of the half-point increase.

ECB president Christine Lagarde indicated it was necessary to deliver a larger-than-expected hike than signalled because inflation pressures, including energy and food price rises, had intensified across the eurozone. 

Around 300,000 households on tracker mortgages face a hike in their home loan costs that will immediately add €1,000 to the annual cost of servicing their home loans, and face even higher costs by the end of the year, experts have predicted. 

It comes after the European Central Bank hiked its official rates by a hefty half a point as the central bank fights inflation that has flared since Russia invaded Ukraine on February 24.  "Price pressures are spreading across more and more sectors," ECB president Christine Lagarde told reporters in Frankfurt.