Interest rate up in July

19/08/2005 12:00

Dutch long-term interest rate, in relation to the return of the latest ten-year period government loan, averaged 3.3 percent in July 2005. This is 0.2 percentage points up on June. This is the second time in a year that the interest rate went up. With exception of March and July this year long-term interest rate fell continuously since mid- 2004.

The European Central Bank (ECB) did not adjust its interest rates in May 2005. The ECB last adjusted its interest rates in June 2003, raising them by 0.5 of a percent point. The lowest rate on the market is the ECB deposit rate which has been by 1.00 percent since June 2003. The main ECB interest rate, the repo rate, has been 2.00 percent since June 2003.

A major guideline for the ECB in determining its interest rate is the inflation rate in the eurozone. In the last couple of years inflation, with a dip in February 2004 of 1.6 percent and a peak of 2.5 percent in May 2004, fluctuates around 2.1 percent. According to the Statistical office of the European Union (Eurostat) the inflation in the eurozone was 2.2 percent on average in July. The European Central Bank (ECB) considers the ideal inflation rate, for a medium long term, to be "close to 2 percent".

Capital market interest rate (latest ten-year period government loan)
Capital market interest rate (latest ten-year period government loan)