ECB expected to cut interest rates today

The European Central Bank (ECB) is widely expected to cut interest rates today.

If a reduction happens it would automatically benefit tracker mortgage customers and put downwards pressure on variable rates.

The ECB had increased rates in an effort to reduce inflation two years ago.

But latest figures show the rise in the cost of living is now 1.8% in the eurozone which is just below the ECB's target of 2%.

There are also indications that growth in the eurozone could be weaker than hoped.

Economists believe the changing economic picture and falling inflation leaves the way clear for the bank to cut rates for the second consecutive month.

If the ECB does cut, it would bring its deposit rate, which dictates lending rates by banks, from 3.5% to 3.25%.

On a €300,000 mortgage it would result in a monthly saving of €46.

While a cut is not a foregone conclusion, the markets believe the bank will reduce rates today.

The change would automatically benefit tracker mortgage customers.

It will also put downward pressure on fixed and variable products.

But any reduction would also result in weaker returns for savers.

Observers will be closely watching comments by Christine Lagarde, the president of the ECB, as an indication as to the pace of future cuts.

Economist Simon Barry said the ECB's Governing Council is "poised to deliver its first back-to-back rate cuts in 13 years".

He added the bank was likely to take the decision due to "latest signals on economic growth and inflation".