Interest rate further down

02/09/2009 09:30

The Dutch long-term interest rate based on the return of the most recent ten-year government loan, averaged 3.6 percent in August. In July the rate was 3.8 percent. The drop in August was the second in a row.

In May 2009, the European Central Bank (ECB) decided to lower its interest rates. The most important ECB interest rate, the repo rate, was cut by a quarter of a percentage point and has stood at 1.0 percent since 13 May. The ECB deposit rate remained unchanged at 0.25 percent. The deposit rate is often regarded as the bottom rate on the interest market.

One of the main guidelines for the ECB’s decision to change or refrain from changing the interest rate is the level of inflation in the Eurozone. According to the ECB, prices in the Eurozone are stable, if the inflation rate is close to 2 percent. Eurostat, the statistical office of the European Union, registered a deflation rate of 0.2 percent in August. This is less than in July, when prices were 0.7 percent lower than one year previously.

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

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