IRISH interest rates could come under renewed pressure this year if credit growth fails to slow, analysts fear. They are warning that any signs of continuing strong credit growth in official figures, due tomorrow, could prompt another hike in bank and building society rates.

However, the Minister for Finance, Mr Quinn, appeared to take a more optimistic view, saying yesterday that the outlook for Irish interest rates was very positive.

Speaking after the monthly meeting of the European Monetary Institute in Frankfurt, Mr Quinn said the overall climate for Irish interest rates "is extremely positive; it is maybe the best it has been in 25 years."

Meanwhile, in an aggressive move, the EBS building society has decided to defer any increase in its mortgage rates until next year but has opted to raise interest rates for depositors from next month.

Interest rates in Dublin remained nervous yesterday, with key one-month money market rates edging higher to 5.75 per cent, as the market waits for the latest indications from the Central Bank, on the strength of credit growth in the economy.

Analysts expect that if the figures show another surge in credit growth in July, they could trigger a further round of rate increases.

"Another high number could push money market rates higher and we could be looking at a second quarter of a percentage point increase in bank and building society rates over the next couple of months," according to Bank of Ireland group treasury economist, Mr Jim Power.

The market is looking for evidence of a slow-down, particularly in commercial lending, in the latest figures. A slight cooling off in the demand for mortgages would also be seen as a positive sign.

Brokers are expecting the figures to show a rise of between 13.5 and 14 per cent in credit growth in July.

While most banks and building societies have already raised mortgage and other lending rates by 0.25 of a percentage point, the EBS said it would only be raising its deposit rates, deferring any increase in mortgage rates until next year.

The move will benefit EBS customers by £800,000, according to chief executive, Mr Pat O'Reilly.

The society said yesterday that any further rise in interest rates this year would have to be reviewed, but it did not foresee any.

Earlier this year, the society intensified its efforts to win a greater share of the Irish mortgage and savings market, when it moved to give its members a share of the profits through higher rates of interest on savings and reductions in the cost of mortgages.

That move, according to the society, would reduce EBS's profits by £5 million this year. Due to strong growth in its business and the favourable market conditions, Mr O'Reilly said the latest package gives members an additional £800,000.

The EBS cited the moves as indications of the advantages of it retaining its mutual status, rather than following recent trends and seeking a public listing.