INTEREST rates look to be on the way down after the European Central Bank (ECB) yesterday paved the way for the first cuts in nearly five years.

As it dropped its previous threat to raise rates to combat inflation, some analysts said borrowers could benefit from a cut as soon as April.

The ECB left rates unchanged when its governing council met yesterday. But its president Jean Claude Trichet struck a noticeably softer tone in his statement and press conference after the meeting.

He stressed the risks to economic growth from the US slowdown and the global credit crunch.

Figures yesterday showed Irish inflation was just below the euro average last month, despite the faster growth in the Irish economy.

The ECB measure does not include mortgages, which take up a bigger share of household spending in Ireland than in other countries.

A cut in interest rates would therefore give a bigger boost to Irish consumer incomes and accelerate the fall in Irish domestic inflation.

He said those prepared to cut the prices of a house on the market were selling them quickly.

But those refusing to accept that the housing market had changed and who would not drop their prices were not shifting their properties.

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