Irish Economists forecast more ECB cuts.

Mortgage holders will be happy to hear the latest thoughts of some “experts” . Savings account holders may not be as happy with the forecast of more ECB interest rate cuts.
As reported in the Sunday Business Post – Dr Dan McLaughlin, chief economist of Bank of Ireland, said he expected interest rates to fall to 2 per cent by the first half of 2009, as long as there was no further spike in oil prices.

According to Jim Power, chief economist with Friends First, the bottom of the housing market has yet to come. He said: ‘‘The eurozone economy is losing momentum rapidly, and inflation is going to ease, due to lower growth, food and energy costs, so the ECB will have to cut rates quite aggressively over the coming months. I would expect up to 1 per cent off rates over the next six months.”

Simon Barry, senior economist with Ulster Bank, agreed that there was plenty of scope for the ECB to cut rates further.

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‘‘There is at least another 1 per cent of reductions now on the cards,” Barry said. ‘‘Incoming economic news has been extremely poor, even before the unprecedented turmoil in financial markets of late fully feeds through. So economic growth forecasts are being slashed, with the eurozone now headed for recession. Weaker growth will contain underlying inflation pressures, while the decline in oil prices will see headline rates of inflation tumble.”