After more than a decade of falling interest rates, the European Central Bank performed the first upload within this period. The goal: curbing inflation. For the financial institution, raising interest rates is the best solution against the inflation that was reached in the euro zone in June 8.6% and shot 10.2% in Spain.
Specifically, the ECB has implemented a rate hike 0.5 percentage pointsand consequently, from 0% to 0.5%. It should be noted that interest rates in the old continent have peaked near 5% and were later reduced to 0% to help the economy recover.
has also risen 50 basis points the creditto which it lends banks overnight, up to 0.75%and the deposit optionthe excess reserves remunerated overnight, up to 0%
Despite the fact that all ECB interest rates are crucial when it comes to determining the price of money lent to companies and customers, the most important is the one that has risen by 0% to the 0.5%. This is the one that everyone usually uses to talk about interest rates. Besides, it’s the main thing refinancingie the one that banks pay when they receive a loan from the European institution.
On the other hand, the Deposit is the one charged or paid for deposits in the BCE. After the decision of the institution it went out -0.50% to the 0% As a result, the banks that used to pay to keep their deposits with the ECB no longer have to do so.
doWhat is the impact of the rise in interest rates?
The most important consequence of the ECB rate hike it will be more expensive to rent, as the interest applied to the balances is higher. However, the Compensation for savers will also be higher. Remember that not only do those who have deposits get more money for them, but also those who have them Letters, Bonds and Commitments of states and companies.
While the people who a Fixed rate mortgagesince the fee to be paid remains the same, Customers paying an adjustable rate mortgage will notice the ECB rate hike. Given that Euribor is the interest rate at which financial institutions lend each other money, the lending banks will experience an increase in the cost of money, which will be passed on to the market.
In case of consumer credit, As they usually have a fixed interest rate, customers should not be affected by the ECB rate hike. However, if you want to rent one, you have to reckon with the fact that it will be more expensive due to its immediate nature and payback period.