DONE WELL, CENTRAL banking is pretty bland stuff. No surprises. Such is the case for next week’s European Central Bank announcement on interest rates.

The people in grey suits are scheduled to spend two days in meetings, emerging at lunchtime on Thursday to confirm that European interest rates will move from 2.25% to 2.5%. As I write, 99.2% of bets on Polymarket are for a rise of 0.25%. You’d be brave to bet against.

This increase, the second since June, will end a long period from September 2023, during which rates were either falling or held steady. The change has implications for your mortgage, your cash and your investments.

The markets are jittery

Eurozone inflation numbers sealed the deal. On Tuesday, the announcement came that inflation across the union has climbed to 3.3%, up from 2.9% in July. You know why: the cost of energy is up 14.3% versus last year – and you need energy for transport, food, industrial goods, and all the rest.

On top of that, investors in the global bond market have the jitters about the extent of government debt across the globe. This might sound duller than a central bank announcement – but you’re going to be hearing a lot more about it over the coming months, and it just might get spicy.

Bond investors are demanding to be paid more to own the bonds of highly indebted countries like the US and the UK. Ireland isn’t in the firing line these days: after Germany and the Netherlands, we pay the third-lowest rate in the Eurozone for government debt – a situation almost unimaginable 15 years ago. But watch France, which needs to pass a budget in the coming weeks, and could well see a spike in the amount it’s forced to pay in order to borrow. Rising bond yields increase costs for many lenders, which filters through into the mortgage market for........

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