Interest rate rises further

04/01/2011 11:30

The Dutch long-term interest rate, based on the return of the most recent ten-year government loan, averaged 3.2 percent in December 2010, i.e. up 0.4 percentage points on November. The long-term interest rate has been rising since it reached the lowest level of the last decades in September 2010 (2.5 percent).

The last time the European Central Bank (ECB) changed its interest rates dates back to May 2009. The most important ECB interest rate, the repo rate, was cut by a quarter of a percent point and has been stable at 1.0 percent since 13 May 2009. 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, recorded an inflation rate of 2.2 percent in the eurozone in December 2010.

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

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