The other main mortgage lenders are expected to follow the lead of the Irish Permanent and cut their mortgage rates by 0.75 of a percentage point over the next few days. Irish Permanent - the biggest mortgage lender in the country - was the first to cut rates last Friday after the Central Bank slashed its repo rates by 1.25 percentage points to 3.69 per cent.

The 1.25 percentage point cut in the repo on Friday is the second cut of that size within a matter of weeks and leaves the key Central Bank rate 0.39 percentage points above the German rate of 3.3 per cent which members of the single currency must reach by the end of the year.

Analysts in Dublin believe that the Central Bank will make the final 0.39 percentage point cut in the repo rate early in December, although there is a belief that this final cut in the repo rate is unlikely to trigger another round of interest rate cuts by the banks and building societies.

The round of cuts begun by the Irish Permanent on Friday is likely to be the last and will leave variable mortgage rates in or around 6 per cent, their lowest level in 40 years.

A need to protect savers and depositors is seen as the main reason for the lenders' wish to make this latest round of rate cuts the final one.

Although the Irish Permanent was first to announce its cut in mortgage rates, the bank did not indicate what it plans to do with its deposit rates.

Demand deposit accounts - for which no notice of withdrawal is required - are currently attracting interest rates of less than one per cent.

Many depositors now face the choice of switching from demand accounts to higher-yielding accounts for which notice of withdrawal is required if they are to get any sort of reasonable return on their savings.

The banks and building societies for their part will be keen to keep deposit rates at a high enough level to attract savers and ensure that there is no flight of funds into financial instruments offering a higher return.

The size of Friday's cut in the repo rate by the Central Bank took many in the markets by surprise, with many believing that the authorities might gradually phase in the reduction in interest rates to euro levels over the remaining seven weeks of the year.

But the timing of this week's meeting of the European Central Bank (ECB) council put the Irish authorities under pressure to cut.

If the Central Bank had not cut its repo rate significantly last week, it would have left Irish interest rates way higher than other members of the single currency and would have inevitably led to questioning of the Irish position at tomorrow's meeting of the ECB council.

The ECB president, Mr Wim Duisenberg, has previously made it clear that he would be keeping a close watch on the timing of interest rate cuts by peripheral countries like Ireland.