Interest rate virtually unchanged

02/08/2007 15:00

The Dutch long-term interest rate, based on the return of the latest ten-year government loans, averaged 4.6 percent in July, almost the same as in June. In Mid-2007, the long-term interest rate reached its highest level since August 2002.

The European Central Bank (ECB) has raised its interest rates by 0.25 percentage points eight times in the course of eighteen months. Since 13 June 2007, the ECB deposit rate has stood at 3.0 percent. The deposit rate is often considered as the bottom rate on the interest market. The main ECB interest rate, the repo rate, has been 4.0 percent since 13 June.

One of the main guidelines for the ECB’s decision to change or refrain from changing the interest rate is the inflation level in the eurozone. According to the ECB, prices are stable in the eurozone, if the inflation rate varies around 2 percent. Eurostat, the statistical office of the European Union, calculated that inflation averaged 1.8 percent in July. With 1.9 percent, inflation in the eurozone was slightly higher in the four preceding months.

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

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