Will rate cut be passed on to consumers?

The European Central Bank announced that it was reducing its base rate by half of one per cent to 3.25 per cent. This came hot on the heels of the absolutely spectacular and unprecedented slashing of the base rate announced by the Bank of England of 1.50 per cent to three per cent.

While the ECB reduction must be applauded and is undoubtedly a massive step in the right direction, I remain both sceptical and reserved in my judgment of such initiatives on two counts. One concerns the fact that for the first time in history the ECB base rate is now greater than the Bank of England's which, therefore, begs the question: Did the ECB do enough with this reduction to fend off the dreaded possibility - more akin to probability - of a eurozone recession, which as predicted by experts is imminent? Should the European base rate be higher than the BOE's?

Second, and this is eminently more germane, can we be reliably assured that this cut in the ECB base rate will be passed on to the Maltese consumer, both in its entirety and with immediate effect, as experience has taught us that this, unaccountably, has not always been the case?

I call upon the relevant financial institutions to, for once, adopt and cultivate a less rapacious and grasping stance and embrace the seemingly alien concept of putting its customers' needs and requirements at the forefront of considerations by instantly passing on this cut in interest rates onto its very lifeblood, i.e. the client.

I also call upon our financial regulator, the MFSA, to monitor and scrutinise these financial entities as it is within their remit to ensure probity in such matters, for I cannot recall any such assistance or intervention in the past by the MFSA regarding similar scenarios. All these entities have a responsibility to enable the economy to get back on track and away from the current toxic financial quagmire we find ourselves bogged down in, through subscribing to the correct course of action necessary to be undertaken to alleviate the pressure on the consumer.

Finally, as stated, I fear that the ECB have only acted somewhat retrospectively out of fear of being perceived as feeble or dithering when robust and forthright decisions were called for. They have been far too conservative in their reduction of the base rate. Perhaps the latest move may prove sufficient to ultimately deter the shadowy presence of the grim reaper - or should that be grim repo - but I fear it will merely delay the inevitability of the fact that hell is coming home for Christmas!