Interest rates in the euro area stay at the lowest level in history. Cost of some household borrowings slightly increased

The European Central Bank is not yet considering to tighten its monetary policy, although inflation in the euro area is likely to rise slightly further in September. ECB interest rates remain extremely low, as do euro area banking rates.

The European Central Bank is not yet considering to tighten its monetary policy, although inflation in the euro area is likely to rise slightly further in September. ECB interest rates remain extremely low, as do euro area banking rates.

In August, the declining trend in interest rates on almost all banking products in the euro area continued. The cost of borrowing from households and corporations remains below 1.5 percent on average.

However, in terms of individual types of loans, the situation differs slightly. For example, short-term consumer loans with a maturity of up to one year for households rose further to 5.76 percent in August. In this case, the average interest rate has been rising steadily since June this year.

For other types of loans to households, there was a further slight decline in interest rates or their actual stagnation. The lowest interest rate is in relation to loans for house purchase, which averages 1.3 percent in the euro area.

In the case of corporate loans, interest rates fell in August as well. As rates are already very low, the decline is naturally slowing down. Most rates on business loans range from 1.7 to 1.8 percent.

Interest rates on bank deposits remain very low. In the case of deposits of households redeemable at notice, the short-term (up to three months) interest rates are higher. For them, the average rate is 0.34 percent, while for deposits redeemable at notice of up to one year, the average rate is 0.16 percent.

Corporate deposits bear interest at a negative interest rate. With a notice period of up to one year, the rate is -0.31 percent, overnight deposits have an interest rate of -0.02 percent.

It cannot be assumed that interest rates in the euro area will change significantly in the near future. The European Central Bank has made it clear several times in recent weeks that it does not intend to tighten monetary policy and does not want to repeat the mistake of the period after the financial crisis of 2008 and 2009, when interest rates rose relatively early.

ECB has only announced recently that it slows the pace of pandemic bond-buying stimulus. „Based on a joint assessment of financing conditions and the inflation outlook, the Governing Council judges that favourable financing conditions can be maintained with a moderately lower pace of net asset purchases under the pandemic emergency purchase programme (PEPP) than in the previous two quarters,“ ECB stated.

Tony Christoforou General Manager Goldenburg Group Ltd.

 

Goldenburg Group Limited is a fully licensed company, supervised by the Cyprus Securities and Exchange Commission (CySEC), with CIF License number 242/14, providing a comprehensive investment services internationally.

Disclaimer: The content of this material constitutes Marketing Communication and does not constitute Investment Advice or Investment Research or an offer for any transactions in financial instrument. The content of the material represents the view of our experts on a generic basis, and does not take into consideration individual readers personal circumstances, investment experience or current financial situation. In addition, the material has not been prepared in accordance with legal requirements designed to promote the independence of Investment Research, and is not subject to any prohibition on dealing ahead of the dissemination of Investment Research. Readers using the material should consider the possibility of encountering substantial losses. The past performance is not a guarantee of future results. Therefore, Goldenburg Group Limited, its relevant persons including affiliates, agents, directors or employees do not guarantee the accuracy, validity, timeliness or completeness of any information/data made available and assume no liability for any loss of traders arising from any investment made based on the said information/data and due to the use and the content of this material.

Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 83.12% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

 

Disclaimer: The content of the Reports constitutes Marketing Communication and does not constitute Investment Advice or Investment Research or an offer for any transactions in financial instrument. The content of the Reports represents the view of our experts on a generic basis, and does not take into consideration individual readers personal circumstances, investment experience or current financial situation. In addition, the Reports have not been prepared in accordance with legal requirements designed to promote the independence of Investment Research, and are not subject to any prohibition on dealing ahead of the dissemination of Investment Research. Readers using the Reports should consider the possibility of encountering substantial losses. The past performance is not a guarantee of future results. Therefore, Goldenburg Group Limited shall not accept any responsibility for any losses of traders due to the use and the content of its Reports.