Euribor development: Low inflation rate and interest rate reduction prospects #finance #euribor #inflation #interest

Euribor development: Low inflation rate and interest rate reduction prospects #finance #euribor #inflation #interest

According to a report by www.n-tv.de, the Euribors on the European money market were fixed significantly lower due to the favorable German inflation data on Wednesday and the European price data on the reporting day. The inflation rate in the euro area fell significantly more than expected in November, which has led to increased expectations of interest rate cuts in the market. According to Deutsche Bank, an interest rate cut in the dollar zone is now fully priced in for May and in the euro zone even for April.

The lower Euribor rates have a direct impact on credit conditions for consumers and companies. Since fixed-interest financial instruments, such as mortgages or corporate bonds, are often linked to Euribor interest rates, lower Euribor rates can lead to lower rates and overall cheaper financing costs. This, in turn, may lead to consumers and businesses borrowing more and investing in the economy, which could stimulate economic growth.

Additionally, expectations of interest rate cuts may lead to increased demand for riskier assets as investors may invest more in stocks and corporate bonds in search of yield. This could cause stock markets to rise and bond yields to fall.

Overall, the lower Euribor rates and the expectation of interest rate cuts could therefore lead to positive sentiment in the financial markets and stimulate economic activity. It will be interesting to see how central banks react to these developments and what concrete measures they take to support the economy.