Dutch interest rate exceptionally low

The Dutch long-term interest rate based on the return of the most recent ten-year public loan dropped further to an average of 1 percent in October, i.e. 0.1 percentage point down from September. The interest rate is currently at its lowest level since the Dutch Central Bank (DNB) started the time series in mid-1986. The highest rate in the time series was recorded in October 1990 (9.2 percent).

The interest rate on the public debt is historically low in nearly all European countries. The Netherlands is ranked among the most creditworthy countries and therefore the Dutch interest rate is one of the lowest in Europe.

In September 2014, the European Central Bank (ECB) has changed various interest rates. The most important ECB rate, the repo rate, is lowered by 0.10 of a percentage point to 0.05 percent, effective from 10 September 2014. The deposit rate, often considered as the bottom rate of the financial market, is lowered by 0.10 of a percentage point with effect from 10 September 2014, to -0.20 percent.

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 below, but close to, 2 percent. Eurostat, the statistical office of the European Union, recorded an inflation rate of 0.4 percent in the eurozone in October.

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

For more information on economic indicators, the reader is referred to the Economic Monitor.