It doesn't go off script. The President of the European Central Bank (ECB), Christine Lagarde, announced another interest rate hike at the end of July. It is in line with the latest, at 25 basis points, and leaves eurozone interest rates at 4.25%. The question remains whether it will be the last or if it will do it again in September.
The Euribor, which closed July with an average of 4.149%, is expected to follow the pace and reach 4.5% towards the end of the year. Those with variable rate mortgages tremble and look for ways to improve the conditions of their mortgage. Meanwhile, those who want to finance their home purchase long for the sweet interest rates of the last decade.
The following map shows the official “price” of money for each country or monetary union. It is the rate at which central banks lend money to other financial institutions in the region.
These figures, then, are not those offered by banks to a user who is going to apply for a mortgage. But they condition them directly.
They also influence, in the case of the eurozone, the value of the Euribor, which is the rate at which the different banks in the eurozone lend money to each other and works as a reference index for variable mortgages.
With interest rates at 4.25%, the euro zone central bank, the ECB, maintains a safe distance from two other powers it respects: the United States and the United Kingdom. They are all fighting to fight inflation at their borders and protect the value of their currency.
The US Federal Reserve System (FED) resumed raising its interest rates on July 26, after the June pause, and they are now in a range between 5.25% and 5 ,fifty %. They are the highest rates in the country since the Great Recession.
The Bank of England, which up to now has shown a firm behavior, is not intimidated and continues with the increases, this time of 25 basis points, more timid than the previous one: its rates are already at 5.25% on August 3, one of the highest in Europe. It is understandable: the UK inflation rate in June (8.0%) is still much higher than that of the United States (3.0%) or the CPI of the euro zone countries.
Price tensions are inconsistent in some Latin American countries. The most, Argentina, where the flight of savers to the dollar shows the distrust of citizens about the economy. The central bank works hard to protect the Argentine peso with interest rates at 97.00%.
Other states have lower rates than Argentina, but double or triple those of Europe or the United States. Chile (10.25%), Mexico (11.25%) or Brazil (13.25%) are examples of this.
At the other end of the map, East Asian countries keep their rates at lower rates.
Among all of them, the case of Japan stands out, whose central bank has had its interests frozen at negative values (-0.10%) since 2016.
Lower interest rates help boost the economy and encourage domestic consumption, for example, and encourage exports of goods.
