Interest rate further down

The Dutch long-term interest rate, based on the return of the most recent ten-year government loan, averaged 4.0 percent in November 2008. This is nearly 0.3 percentage points down on October. In June and July, the long-term interest rate averaged 4.7 percent, the highest level in nearly six years. 

In December 2008, the European Central Bank (ECB) lowered its interest rates by 0.75 percentage points. As from 10 December 2008, the ECB deposit rate stands at 2.0 percent. The deposit rate is often considered as the bottom rate on the interest market. As from 10 December 2008, the most important ECB interest rate, the repo rate, stands at 2.5 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. Inflation has been above 2 percent for more than a year now, but for November 2008 Eurostat, the statistical office of the European Union, calculated an average inflation of 2.1 percent. In October, the average price level was 3.2 percent up on the same month in 2007.

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