ECB expected to increase interest rates

The European Central Bank is widely anticipated to raise interest rates by a quarter of a percentage point today, increasing its main rate to 2.5%. This action comes in response to escalating inflation, primarily driven by soaring oil prices. Eurozone inflation stands at 3.3%, surpassing the ECB's 2% target. Consequently, the bank is almost certain to raise rates for the second time this year.

This move will automatically result in higher repayments for tracker mortgage holders, with monthly payments increasing by €13 for every €100,000 borrowed. Additionally, the rate hike will exert upward pressure on other mortgage rates over time. However, astute savers may capitalize on higher returns as some financial institutions are expected to pass on the increase.

ECB President Christine Lagarde's remarks will be closely scrutinized for insights into potential future rate hikes. The consistent rise in oil prices, with the price per barrel breaching the $100 per barrel mark again this week due to escalating tensions in Iran, will also weigh on the ECB's deliberations.