Interest rates in Ireland have risen in recent times, in line with the eurozone. The European Central Bank (ECB) raised its benchmark interest rates by 4.00 percentage points between July 2022 and the end of 2023, in an effort to combat high inflation. Then, on 6 June 2024, the ECB cut interest rates for the first time in almost five years, to 3.75%.
Read on to discover if and when interest rates are likely to increase or decrease again, and what this could mean for savings accounts.
Inflation in Ireland is currently 2.6%
The ECB has cut interest rates for the first time in nearly five years
High interest rates may not be around for much longer
At its most recent meeting on 6 June 2024, the Governing Council of the ECB decided to decrease interest rates on the marginal lending facility and the deposit facility to 4.25%, 4.50% and 3.75% respectively.
These rates are used as a reference point by Irish banks when setting their own interest rates on loans and deposits.
As of May 2024, the latest period available, inflation in Ireland is at 2.6%, the same as the previous month.
Following ten rate hikes over the past 23 months, the ECB cut interest rates on 6 June. So, what does this mean for Irish savers?
While those on tracker mortgages will welcome the news, time could be running out for savers to take advantage of strong rate offerings. As mortgage rates go down, so too will rates on savings accounts. Now could be the ideal time to lock your money away.
The ECB raised its benchmark interest rates by 4.00 percentage points between July 2022 and the end of 2023, before lowering its record-high deposit rate by 25 basis points to 3.75% in June 2024.
However, Christine Lagarde, president of the ECB, warned that the fight against inflation is far from over.
According to figures from the Central Bank of Ireland, the average interest rate on new Irish mortgage agreements was 4.31% in March. This is the sixth-highest rate in the eurozone.
It looks as though interest rates in Ireland will decrease, following the ECB's announcement, but this is dependent on the wider economy, and what happens in the eurozone.
While the ECB is remaining cautious, it's expected that interest rates will continue to fall. As a result, high savings interest rates may not be around for much longer.
Here are some tips for savers in Ireland in the current interest rate environment:
So, what's the best savings account for you? This will depend on various factors, for example the amount you have to invest, and whether you’ll need access to your money. If you can afford to lock your money away for a set period, you might opt for a fixed interest rate product. This type of savings account typically offers the most competitive rates, and is ideal for long term savings goals.
Public Expenditure Minister, Paschal Donohoe, has said: “It’s up to people who have money they are going to put on deposit to get the rate of return that they think is best for them. Looking to put money in other parts of Europe, and other banks elsewhere in Europe, is not an unpatriotic act. It’s the way the single market functions.”
Regardless of what happens to the interest rate in Ireland, there’s never a bad time to save. Whether it’s to take advantage of future spikes in interest rates or to protect yourself and your family from an unseen financial fallout, opening a savings account will give you more for your money.
To find the best savings account for you and compare interest rates on savings accounts, register for a Raisin Account and log in to apply.