Statement on today’s ECB interest rate decision
Ulrich Creydt, Tax Consultant and Managing Director, Ypsilon Steuerberatungsgesellschaft
“The ECB’s 25 basis point increase in the interest rate is understandable, as inflation in the euro area was 3.3 percent in August. In Germany, it was slightly lower, at 2.9 percent. The biggest inflation driver was energy prices. This development, which was further exacerbated in August by the low water levels in many European rivers, could not be ignored by the ECB, which is pursuing an inflation target of 2 percent: On the Rhine, for example, less fuel could be transported and in France even nuclear power plants had to reduce their production because neighboring rivers had too little water for cooling. This shows that the climate also has an impact on the key interest rate.
The interest rate hike is expected to have a negative impact on the real estate market. Interest rates on loans could rise and follow-up financing could be made more difficult. This and the gloomy economic situation are likely to cause consumers to postpone the purchase of residential property: because even minimal interest rate changes make it much more difficult to finance one’s own four walls.”
