EUROPEAN CENTRAL BANK RAISES INTEREST RATES AGAIN

Late October 2022, the ECB raised the interest rate considerably by 75 basis points. In December 2022, it raised the interest rate again by 50 basis points,

to 2%. On February 2nd 2023, the ECB will raise the interest rates again by 50 basis points and in March once again by 50 basis points, bringing the base rate

to 3%. How much the Euribor will be remains an open question.

Eurozone inflation has fallen to 9.2% thanks to dropping energy prices, which however is still far above the target of 2% which was incidentally relatively common before 2020. For now, however, there are no signs that underlying price increases will go down too.

Due to rising costs, almost all companies have operated price increases several times in 2022. When costs diminish prices should in principle drop down accordingly but, until further notice, this is not happening. Core inflation continues to rise further from 5.2% to 5.5%.

The only way to fight inflation is by raising interest rates, which is first and foremost a good thing for the ECB whois the main financier of just about all European member states and can therefore set the rules.

The new increase in interest rates means that borrowing money will become increasingly expensive and the monthly repayments on current variable credits will also rise quite a bit at the annuel renewal date. The monthly capital repayment will remain the same but the interest on that capital will rise.

In short, your loan will cost more.

The increase in interest rates will also have a disastrous effect on public debt. Belgium is struggling with a public debt of more than €540 billion on which it has to pay monthly interest to the ECB. If there's a rise of the base interest rate, more interest has to be paid monthly. It is a bottomless barrel that can no longer be filled in any way.

The Vivaldi government has approved the 2023 budget with a deficit of as much as €34 billion. That 34 billion is expenditure that the government has budgeted but of which the first centime is not available. This is unprecedented in Belgian history. With the rise in interest rates on the public debt, that 34 billion will rise even further to .... ?