The Dutch long-term interest rate, based on the return of ten-year government loan, averaged 4.4 percent in August 2008. In June and July, the long-term interest rate averaged 4.7 percent, the highest level in nearly six years.
On 9 July 2008, the European Central Bank (ECB) changed its interest rates. The ECB deposit rate currently stands at 3.25 percent. The deposit rate is often considered as the bottom rate on the interest market. The main ECB interest rate, the repo rate, stands at 4.25 percent since 9 July 2008. The last time the ECB raised its interest rates prior to this change (by 0.25 percentage points) was on 9 June 2007.
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 is close to 2 percent. Inflation has been above this target figure for a year now. Eurostat, the statistical office of the European Union, calculated an average inflation of 3.8 percent for August 2008.
Capital market interest rate (latest ten-year government bond)