Belgian long-term interest rates rise to highest level in 2.5 years due to Middle East conflict
Belgian ten-year interest rates rose to 3.496 per cent on Monday, an increase of 8 basis points and the highest level since October 2023. Higher interest rates normally make borrowing for a home more expensive, and an interest rate rise is also bad news for the Belgian treasury.
Belgian long-term interest rates are not the only ones to have shot up in recent days. The same phenomenon is occurring throughout Europe as a result of the violence in the Middle East and the sharp rise in oil prices. Fears of inflation and recession are growing.
According to Jean Deboutte, head of the Belgian Debt Agency, there was a massive sell-off of government bonds on Monday morning, leading to an increase in the interest rates on those bonds. This is also filtering through to mortgage interest rates, which are linked to the Belgian linear bond or OLO.
Other countries have also seen their long-term interest rates rise. Germany, whose “Bund” is considered the benchmark on the market, saw its ten-year interest rate climb to 2.885 per cent, France to 3.580 per cent and the United Kingdom to as high as 4.751 per cent. Higher interest rates make borrowing on the financial markets more expensive. Short-term interest rates and 30-year interest rates also rose on Monday.
Higher interest rates also make borrowing more expensive for households and businesses, which in turn can lead to a slowdown in economic growth. “We are in a classic scenario, unfortunately not a positive one,” Deboutte acknowledged. “The big unknown is how long this situation will last.”
Jean Deboutte, head of the Belgian Debt Agency, in 2023 © BELGA PHOTO JAMES ARTHUR GEKIERE
Related news
