Irish Intercontinental Bank has become the first Irish financial institution to pass on yesterday's half-point interest rate cut to consumers.
The bank is lowering its standard variable mortgage rate by half a percentage point to 3.45 per cent with immediate effect for new customers and at the beginning of next month for existing customers.
Earlier today, the Labour Party said the new financial services regulator should investigate any failure by the financial institutions to pass on the rate cut to customers.
Labour's finance spokeswoman, Ms Joan Burton, claimed the reluctance of banks and building societies to pass on yesterday's 0.5 per cent rate cut raises serious questions about the competitiveness of the Irish banking sector.
Although yesterday's decison by the ECB to cut lending rates to 2 per cent was widely expected, the leading Irish institutions expressed uncertainty as to whether the full rate cut would be passed on to borrowers and mortgage holders.
Ms Burton said the rate cut would offer relief for retail consumers dealing with high levels of borrowing in more uncertain economic times.
"It is simply not acceptable that the banks, who are among the most profitable sectors of the Irish economy would retain the benefits of this cut," Ms Burton said.