The European Central Bank (ECB) raised interest rates by a further 0.5% in an effort to drive down inflation.
The announcement on the ECB website marks the fifth interest rate hike in less than a year by the ECB and another half-point hike is expected in March, according to EU officials.
The hikes will effect around 300,000 tracker mortgage holders in Ireland as their payments will increase.
“It is estimated that a 0.5% increase in ECB rates will increase monthly repayments for tracker mortgage customers by €50 for every €100,000 borrowed," said Trevor Grant, Association of Irish Mortgage Advisors chairperson.
Head of Credit with online brokers MyMortgages.ie Joey Sheahan said it is likely that a complete repricing of fixed and variable rates will be offered by lenders, if rates continue to increase throughout the year.
The latest increase follows the decision by the Bank of England to raise interest rates by 50 basis points, but hinted its tightening cycle was nearing an end.
Yesterday, the US banking regulator also raised rates but by 0.25%. However, the Federal Reserve promised there will be "ongoing increases" in borrowing costs as part of its still-unresolved battle against inflation.
The ECB announcement does not come as a shock for many as officials recently indicated more half-point increases are needed to get inflation under control.
“In the December data, we saw a first decline in headline inflation, but that was entirely due to base effects and lower energy inflation,” said ECB governing council member Klaas Knot in recent weeks.
“We focus on core inflation where, unfortunately, there is no good news. Because it is still on the rise. Underlying inflationary pressures show no signs of abating yet,” he added.
Mr Knot said people should expect more hikes in the coming months.
Still, some officials consider slowing the pace of tightening as price pressures ease and energy costs drop, according to people familiar with the matter.
But Mr Knot is not alone in his pushback against taking the foot off the gas too quickly.
Ahead of the latest hike, ECB president Christine Lagarde told the World Economic Forum in Davos last month that policymakers would “stay the course”.
Mr Grant also predicts there will be more hikes this year.
"All of the indicators point to the ECB continuing to raise rates as long as core inflation remains what has been described as stubbornly high and as core inflation forecasts remain above 2%," he said
Officials in 2022 raised the deposit rate by 250 basis points to 2% and economists in a Bloomberg survey see them peaking at 3.25% by summer.
- Additional reporting by Bloomberg, Reuters