Several financial institutions in this country have cut mortgage repayments. They were responding to a move by the European Central Bank in Frankfurt to reduce interest rates. The interest rate cut, which took the financial world by surprise, was a quarter per cent, from 4.75% to 4.5%. The ECB insisted the rate cut was not a response to the slowdown in the US economy but was instead triggered by new data showing that the amount of money circulating in Europe was significantly lower than previously believed.
First Active was among the financial institutions to announce it was responding to the cut. The ECB had come under increasing pressure from international organisations such as the OECD and the IMF, as well as from treasury officials in the US and elsewhere, over its refusal to cut interest rates in response to fears of a global economic slowdown. Nevertheless, it had been expected that the bank would leave its rates unchanged until European inflation concerns eased.
