As the European Central Bank meets on Thursday to decide whether to hike interest rates for the tenth time in 14 months, businesses and households across Ireland are already dealing with a dramatically changed financial reality.
For more than a decade until last summer, rates were on the floor. Central banks lived by the dictum of “lower for longer” in an effort to stimulate weak economic growth in the years following the financial crisis. The Covid-19 pandemic only prolonged the unusual circumstances, in effect turning Zirp – zero interest rate policy – into the new normal.
So the past year has been something of a shock as the cost of finance has shot up so rapidly. The main borrowing rate is now 4.25 per cent,
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