Interest rate slightly up

09/11/2011 09:30

The Dutch long-term interest rate, based on the return of the most recent ten-year public loan, averaged 2.5 percent in October 2011, i.e. 0.2 percentage points up on September. In September, the long-term interest rate had reached its lowest level in decades.

The European Central Bank (ECB) changed various interest rates in November 2011. The most important ECB rate, the repo rate, was lowered by 0.25 percentage points to 1.25 percent, effective as from 9 November 2011.The deposit rate, often considered as the bottom rate of the financial market, was also reduced by 0.25 percentage points, to 0.5 percent. Both rates had been raised by 0.25 percentage points in April and July.

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, eurozone prices are stable, if the inflation rate is close to 2 percent. Eurostat, the statistical office of the European Union, recorded an inflation rate of 3.0 percent in the eurozone in October 2011, the same rate as in September.

In September 2011, the interest rate on the latest Dutch ten-year government bonds was below the level of inflation, which is quite exceptional. More information can be found in the article “Interest rate on government bonds lower than inflation”.

Capital market interest rate (latest ten-year public loan)