The Dutch long-term interest rate, based on the return of the latest ten-year government bonds, averaged 3.5 percent in November 2005. This is 0.2 percent point higher than in October. The interest rate in October is at the level of April 2005.
The European Central Bank (ECB) increased its interest rate by 0.25 percent point on 1 December 2005. The previous ECB rate change was in June 2003, when the ECB lowered its rate by 0.5 of a percent point. The lowest rate on the market is the ECB deposit rate, which is 1.25 percent as of December 2005. The main ECB interest rate, the repo rate, is 2.25 percent as of December 2005.
A major reason for the ECB to change its interest rate is the inflation rate in the eurozone. In the last couple of years inflation stayed around 2.1 percent, with a dip in February 2004 of 1.6. The inflation rate in the eurozone in October averaged 2.5 percent. Eurostat, the Statistical Bureau of the European Union, expects a 2.4 percent inflation rate in the eurozone for November 2005.
Capital market interest rate (latest ten-year government bond)