Key European Lending Rate Soars To 21 Month High As Continent Prices In Trichet's Rate Hike

trichet euro ecb

Three month euribor, the interbank lending rate in Europe, is at a 21 month high in advance of next Thursday’s ECB meeting.

The indication is that, considering yesterday’s hot inflation number for the eurozone, Trichet and the ECB will be increasing the region’s key rate by 0.25% at its April 7 meeting.

The 12-month euribor, or rate at which banks lend to each other within the eurozone, is now above 2%, according to Bloomberg.

While inflation hawks may be pleased about this turn of events, it is having consequences in some of Europe’s more troubled economies.

In Spain, the euribor is the base rate for mortgage lending, so the higher 12-month euribor, the higher mortgage rates. In a country where unemployment is high and the real estate sector is struggling, this is not welcome news.

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