Many clients are expressing surprise at current high interest rates. Let’s delve into the situation surrounding Euribor, which plays a pivotal role in determining the interest rates offered by banks to their clients, both savers and borrowers.
Euribor, an abbreviation of the Euro InterBank Offered Rate, refers to the price at which European banks lend money to each other. This flow of capital between banks, from those who have funds to lend, to those that wish to borrow, allows the financial system to operate efficiently. Euribor is largely governed by the ‘base’ rate set by the European Central Bank (ECB).
In September, the (ECB) made a significant decision to raise interest rates for the tenth time, with a quarter-point hike, bringing the rate to 4.5%. The possibility of another increase is not completely ruled out and the likelihood of a rate cut in 2024 has diminished. If such a cut does occur, it would probably happen later in the year or even in 2025.