Retail interest rate pass-through: the Irish experience

Abstract

In this paper, we examine the extent to which changes in the money market interest rate are passed through to a number of retail lending rates between 1980 and 2001. In addition, we analyse the speed of adjustment of these lending rates with respect to such changes in the money market rate. Our main findings are: (1) pass-through from the money market rate to lending rates is not complete (2) the speed of adjustment varies quite considerably across alternative lending rates and (3) there has been significant structural change in the relationship between the money market rate and lending rates both in terms of pass-through and speed of adjustment during this period.