Interest rate further down

15/01/2009 15:00

The Dutch long-term interest rate, based on the return of the most recent ten-year government loan, averaged 3.7 percent in December 2008. This is 0.3 percentage points down on November. In mid-2008, the long-term interest rate averaged 4.7 percent, the highest level in nearly six years. Subsequently, the rate has dropped continually.  

In January 2009, the European Central Bank (ECB) lowered its interest rates. As from 21 January 2009, the ECB deposit rate stands at 1.0 percent. The deposit rate is often considered as the bottom rate on the interest market. As from 21 January 2009, the most important ECB interest rate, the repo rate, stands at 2.0 percent.

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. For December 2008 Eurostat, the statistical office of the European Union, calculated an average inflation rate of 1.6 percent, as against 2.1 percent in November. Previously, inflation had been well above 2 percent for a period of more than a year.

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

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