The ECB has announced a cut in the base interest rate from 0.25% to 0.15%.
The rates that banks get for funds on deposit has also been cut to minus 0.1% – making it the first major central bank to venture into negative interest rates. Both cuts take effect from June 11th.
The ECB hope that the negative rate will incentivise the banks to lend to businesses, thereby stimulating growth.
The Euro weakened against both Sterling and the Dollar after the announcement – even though the rate cut had been expected .
Holders of tracker mortgages will see repayments falling again. The ECB rate has fallen from 4.25% in 2008 down to 0.15% now. On a 200,000 tracker mortgage over 25 years at ECB plus 0.5% – that would mean a drop in repayments from €1140 a month to just €722 a month.
See the Historic ECB Rates here