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The Belgian ten-year interest rate fluctuated around 2.95 percent on Wednesday, the highest level this year. At the end of December, the same interest rate was lower than 2.5 percent; the lowest level in 2023. A higher interest rate makes borrowing more expensive and is also bad news for the treasury.
Source: BELGA
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The rise in interest rates has been going on for several weeks. The financial markets previously expected rapid interest rate cuts in the US and Europe because the high inflation is also cooling down. But the chance that the Fed would make a first cut in March has now become somewhat smaller, the Bloomberg news agency wrote on Wednesday. Interest rates are rising again in both Europe and the US.
In October last year, the Belgian long-term interest rate stood at more than 3.6 percent, the highest level in more than eleven years.
Higher interest rates are bad news for the Belgian treasury, because it has to raise billions every year on the financial markets. Home loans, which are linked to Belgian OLOs (linear bonds), also theoretically become more expensive when interest rates rise. And finally, shares also become less attractive with higher interest rates.