The Irish money markets are still in limbo waiting for a signal from the Central Bank on the beginning of interest rate cuts. However, it now appears that expectations of immediate pressure from market movements for large cuts in rates may have been overdone.

Many commentators have been arguing that the sheer wall of money which could hit the foreign exchange markets would drive rates down, but this is dismissed by Mr Jim O'Leary, chief economist at Davy Stockbrokers.

He insists that the Central Bank cannot be forced into cutting rates. "The reality of a wall of money is only a runner if something happens which dramatically increases a currency's upside potential.

"The reality is that the upside is no way increased by last weekend and was in fact reduced as the size of the revaluation is now known."

While the Bank can probably not be forced into rate cuts, it can still choose to begin cutting as soon as it likes. However, it is understood that it is not keen to see dramatic cuts. Such a move could give a further unneeded boost to the housing market and could in any case be partly unwound by German rate rises later in the year.

Some observers are now expecting a half point cut before May with gradual cuts over the future months which bring us to German levels.