Interest rate on government bonds lower than inflation

06/10/2011 09:30

In September 2011, the interest rate on the latest Dutch ten-year government bonds averaged 2.3 percent. For the first time in decades, the interest rate on government bonds was lower than inflation in the Netherlands, which was 2.7 percent in September.

Capital market interest rate (latest ten-year government bond) and inflation

Capital market interest rate (latest ten-year government bond) and inflation

The interest rate has fallen considerably in the last five months, whereas inflation has gradually risen. The decrease in the interest rate went hand in hand with increased tension on the stock markets and financial problems in a number of south European countries. Dutch government bonds are now usually considered as a safe haven by investors.

Wouter Jonkers