The Euribor climbs past 3 percent amid ECB signals
The 12 month Euribor rose to 3 percent in its daily movement this Monday, a level not seen since December 2008, according to data cited by Europa Press. With today’s figures, Euribor’s monthly average stands at 2.8 percent, leaving room for it to stay below 3 percent by year’s end.
In December, the benchmark affecting the most volatile Spanish mortgages hovered around 2.8 percent. Following the European Central Bank’s ECB meeting last Thursday, the indicator moved higher, registering two days above that mark. It reached 2.993 percent on Friday and sits near 3.057 percent today.
The ECB decided to raise interest rates at its final meeting of the year, by 50 basis points to 2.5 percent. Although the increase followed two prior jumps of 75 basis points, officials signaled that rates should continue to rise “significantly” and steadily until they reach sufficiently restrictive levels to bring prices back toward target targets. The aim remains to achieve a 2 percent inflation rate in the medium term.
“paralysis” in November
These moves followed Euribor stabilizing at 2.8 percent in November. HelpMyCash attributes this “paralysis” to three factors: initially the index sat about one percentage point above the policy rate, experts point to a moderation in ECB growth projections, and finally inflation across Europe has eased.
As long as the ECB targets inflation reduction, with Eurozone CPI easing to around 10.1 percent, further rate hikes are expected. Analysts caution that the rise may be calmer and slower than in recent months rather than abrupt. Olivia Feldman, co-founder of a financial comparison firm, notes this context and sees gradual tightening as the trend going forward.
One reason for a cautious trajectory is to avoid harming euro area economies. The central bank bears a delicate balancing act: dampen inflation while preventing undue strain on highly indebted countries. The consensus among experts is that policy rates could rise by roughly another percentage point over the next year, aligning with a gradual approach rather than sharp moves.
Under this scenario, expectations point to Euribor approaching 3 percent in early 2023, with the rate possibly reaching around 3.5 percent by mid-year, a level seen previously in the summer months. Data and expert commentary suggest that the path will favor measured increments rather than steep climbs, in an effort to stabilize lending costs while keeping inflation on a downward trajectory.
Market observers emphasize that the ECB’s strategy aims to anchor expectations and avoid sparking unnecessary volatility in debt markets. The focus remains on balancing growth prospects with price stability, a task that requires prudence as monetary policy signals continue to evolve in response to incoming data and shifting inflation pressures.
Overall, the month’s developments reflect a transitional period for European rates, with investors watching closely how the ECB calibrates its next moves. The key question for households and lenders is how much longer the Euribor will stay near this high plateau and what that means for mortgage costs in the near term. Analysts advise staying informed through official updates and avoiding overreaction to short-term fluctuations. Citations: Europa Press, HelpMyCash, and market analysts.