COMMENTATORS had expected further rate cuts for borrowers after National Irish Bank's half point cut last Friday. However, most of the main banks and societies say they are still reviewing the situation. A number, including TSB, will be holding meetings to discuss changes today.

They are waiting for the wholesale one month rate to trade below 5 per cent again. It was trading around 5.18 per, cent yesterday.

In addition, many analysts expect the big players to wait for the Bundesbank to lead the way on any rate cuts.

The Central Bank has scope to cut Irish interest rates, according to Mr Eoin Fahy, senior economist at Ulster Bank Markets.

Mr Fahy said he expects the central bank to have cut the Irish short term facility (STE) by the end of the month - but only if the Bundesbank cuts first. This would be taken as a clear signal by the banks and general rate cuts would almost certainly follow.

Mr Fahy added that fears that an interest rate cut could lead to a worsening in exchange rates are unfounded. Although Ireland is well below its post devaluation 2.25 per cent ERM band, a return would push the exchange rate against sterling at 106p, he said.

"Indeed it could be argued that if the Irish Central Bank did not cut interest rates in response to German cuts, it could be drawing the attention of the financial markets to the Irish currency in a way which would certainly not be helpful."

Mr Fahy also believes that lower interest rates are unlikely to lead to a large upsurge in inflation.

Although a cut in key German interest rates is possible as early as this Thursday, Mr Fahy thinks it unlikely.