ECB lowers interest rate
Ivo Arnold, Vice Dean and Professor of Economic Education at Erasmus School of Economics
Erasmus School of Economics

Ivo Arnold, Professor of Monetary Economics at Erasmus School of Economics, gives his take on the lower ECB rates for savings accounts and mortgages. Has this been a good choice or not?

The European Central Bank has cut interest rates for the first time in five years, as inflation is thought to be under control. Arnold thinks the situation is not yet completely under control. In his view, the biggest uncertainty currently lies in the incorporation of wage increases into prices. Indeed, if this is not yet done, inflation could rise again in the coming period. So ideally, he said, the ECB would have waited before cutting interest rates. 

National banks' savings rates were often aligned with ECB savings rates. Now, however, savings rates are not currently expected to go down with them. For mortgage rates, the situation depends mainly on investors in the bond markets, Arnold points out. If they think inflation is under control, bond yields will go down. This will not bring down mortgage rates, However, without investor confidence, nothing will happen to mortgage rates.

Ivo Arnold, Professor of Monetary Economics at Erasmus School of Economics
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You can download the full article from, 6 June 2024, above.

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