Will the ECB raise the benchmark interest rate?

The European Central Bank (ECB) will meet today to decide whether it will raise the benchmark interest rate again.

According to earlier announcements by the president of this financial institution, Christine Lagarde, the interest rate will most likely be raised once again by 50 basis points, i.e. by 0.5 percent, to further curb inflation in the European Union. Although Serbia is not in the EU, all the decisions made by the ECB affect our citizens too, since, due to the increase in interest rates, the Euribor will inevitably rise (Euribor is an interest rate that affects the amount of monthly loan instalments that loan users pay).

If the interest rates are raised by 0.5 percent, the interest on foreign currency facilities will amount to 3 percent, on the main refinancing operations 3.5 percent, and on marginal credit facilities 3.75 percent.

However, even though interest rates will rise today, the loan instalments (for loans granted in euros) will not jump immediately.

Euribor has several values, but three-month and six-month rates are essential for loan users. Therefore, the specific date of adjustment of the instalment amount depends on loan users’ contracts with their banks. For some, the instalment changes four times a year, and for some, twice a year.

In the case of the three-month Euribor, the instalments are adjusted on March 31, June 30, September 30 and December 31, while in the case of the six-month Euribor on June 30 and December 31.

Experts have recently pointed out that the fall of Euribor is certain, but it can only happen when inflation in Europe drops to 3 percent. According to official data, it was 8.5 percent in February.

 (Nova.rs, 16.03.2023)


This post is also available in: Italiano

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