ECB Cuts Base Rate to 0.50%

CiaranT,

it's the wrong forum, but have you any opinion on how deposit rates might react to this ECB rate cut?

I know that dep rates have fallen recently (which I think was good and sensible for the banking system).

I know that 3% seems to be about the best rate now.

Maybe there's so much competition for funds that retail rates will hold?
 
Protocol said:
CiaranT,

it's the wrong forum, but have you any opinion on how deposit rates might react to this ECB rate cut?
Click to expand...

As you said, deposit rates have been on a downward slope unfortunately.

The downward slope has been influenced by:
(1) Improving loans-to-deposits ratios in the banks (but few banks are sub 100% yet).
(2) Reduced reliance on the ECB and CBI for emergency liquidity (but 53 BN is still outstanding).
(3) Reduced competition (KBC the only exception) .
(4) Banks not out bidding each other for the highest rate to the same extent as recent years (but Irish deposit rates still above most of the Eurozone).
(5) Reduced Euribor/ECB rates.

Hence, I think the reduced ECB rate, will have an effect on deposit rates, but it is not currently the main driving force behind the Irish deposit rate reductions, for the moment anyway.
 
I know its a laughable question but will any bank cut their svr in line with the ECB cut .
 
reddanmm said:
I know its a laughable question but will any bank cut their svr in line with the ECB cut .
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I'd speculate that AIB will cut their SVR. The timing of their recent 0.4% increase seemed too coincidental to me. By the time they announced the rate increase there were very strong rumours of an imminent ECB rate cut. So perhaps they felt they could take the PR hit of putting up their rate by 0.4% so that they could follow up by taking the high moral ground and passing on the 0.25% cut in full and be heroes again.

Just speculating, mind you...
 

I was going to ask do they take up for complete fools but realised almost immediately that it would be rhetorical,of course they do and they would be 100% correct.
 
bugler said:
There will be no SVR cuts.

http://www.irishtimes.com/news/banks-not-to-pass-on-ecb-rate-cut-to-variable-mortgages-1.1381046

I'm not sure if we should expect banks to actually announce this (?)
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No surprise there then and as I pointed out before in this thread retail rates and base rates have largely decoupled. An expansionary monetary policy by the ECB, such as yesterday's 25 basis points reduction in the main refinancing rate, is thus rendered useless by these self serving, bailed out, bungling, buffoon, broke bankers, by not passing it on. Someone in government needs to tell these fools that a growing economy is in their interest and one way to encourage economy activity is to lower interest rates. The gall of a bailed out bank creating a 65 basis point differential in the space of a week is mind numbing but not unexpected.
 
Thank goodness for the rate cut as I am lucky enough to be on a tracker and my middle name is 'negative equity'. ;-)
 
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