EU Interest Rates
The current basic ECB interest rate is 4.25% as of 2024-07-23. You can find the latest EU interest rates analytics and data on MacroVar.
| ECB refinancing rate | 4.25% |
| ESTER rate | 3.665% |
| EURIBOR 3 Months | 3.7% |
| Germany 2-Year Bond Yield | 2.766% |
| Germany 10-Year Bond Yield | 2.438% |
| France 10-Year Bond Yield | 3.127% |
| France 2-Year Bond Yield | 2.936% |
| Italy 2-Year Bond Yield | 3.127% |
| Italy 10-Year Bond Yield | 3.763% |
EU Interest Rates Chart
EU interest rates interpretation
When the EU economy is strong and inflation expectations are rising the market is expecting central banks to raise rates in order to decelerate economic and inflation expectations. Short-term interest rates like the ECB policy interest rates are linked to the macroeconomic environment, fiscal and monetary policies and the financial markets (commodities).Hence, short term interest rates should be expected to rise and their related futures which are the 3-month ESTR futures should sell off (note: implied interest rate for futures is calculated as 100 minus the futures price). At the same time and since markets are interrelated, fixed income markets are linked the Yield Curve (10-year minus 3-month). The Yield curve steepens when growth expectations are rising and flattens when growth falls (MacroVar monitors all macroeconomic and financial factors which are leading indicators of growth expectations).
When central banks set rates correctly, we should expect smooth slope implied curve in the short term interest rate futures markets.
Highly sloping implied rate curves imply that the central bank reacted too late, the economy has overheated causing inflationary pressures and the futures markets imply aggressive interest rate hikes.
An Inverted implied rate curve implies that the central bank reacted too late, hence has to be more aggressive in order to combat inflation pressures, causing the business cycle to shorten, a possible recession due to early fast hikes and interest rate cuts later on to combat an impeding recession.
The ECB's meetings affect these markets to a large extent. When the ECB becomes more hawkish (tendency to raise rates) or dovish by either adjusting interest rates and/or use QE/QT, it affects the Short-term interest rates futures markets directly.
When the German 2-year bond yield which is determined by market forces falls below the ECB refinancing rate it implies the market expects ECB to cut interest rates in the short-term future in order to boost the economy which is currently weak.