Interest rate slightly down

The Dutch long-term interest rate in the Netherlands based on the return on ten-year government loans averaged 4.1 percent in January 2008, which is 0.2 percentage points down on December 2007. In June last year, the long-term interest rate reached its highest level in nearly half a decade.

The European Central Bank (ECB) raised its interest rates by 0.25 percentage points eight times in the space of eighteen months. Since 13 June 2007, the ECB deposit rate has been 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 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 varies around 2 percent. Eurostat, the statistical office of the European Union, calculated that inflation averaged 3.2 percent in January 2008. Eurozone inflation exceeded 2 percent in September and rapidly continued to rise. The price increase in January 2008 is the largest ever recorded.

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