Interest rates are coming down this year. But the big question is when? Late last year, many analysts were forecasting that come 1998, rates would quickly fall as the market started to look towards our entry to the euro.

However, the Central Bank has made it clear by its action in the money market that it is going to hold on and try to keep interest rates from falling for as long as possible. This means it could be May before we start to see a reduction.

The interest rates charged to borrowers are determined by rates on the Dublin wholesale money market, where banks lend funds to each other. The Central Bank has acted to keep rates high on this market by continuing to supply funds through its regular "repo" or sale and repurchase mechanism at more than 6 per cent. In recent weeks the funds have been supplied to the market at 6per cent.

This has acted as a brake to one-month money rates falling back below 6 per cent, with this rate continuing to trade at around 6. The Bank is helped in its efforts to keep rates high by a general shortage of funds in the market.

Early last year the Bank intervened to buy pounds in the Dublin market to support the currency's value. This created a shortage of funds still affecting the market, giving the Central Bank greater scope to control the market and keep rates up by managing the funds it supplies to the banks here.

No doubt the strength of the housing market and the figures showing a rapid growth in borrowing from banks and building societies have persuaded the bank to try to hold off from letting rates fall for as long as possible.

However, there is a touch of the King Canute in its actions. Once the uncertainty about the rate of entry for the pound is cleared up - and the EU Ministers are to decide on this issue in May, when they choose the ins and outs - rates are bound to fall, and fairly quickly.

The danger in the Central Bank's current tactics is that while they will keep rates up for the moment, they may lead to an uncomfortably rapid fall in borrowing costs later this year. The Central Bank may be able to control the Dublin money market for the moment. But soon enough pressure will start to build in the market for lower rates and all the bank will be able to do is sit and watch.