Long-term interest rates will remain low for the time being and the euro will remain stable. This is what ABN Amro predicts in a report that was published on Tuesday 2 January.
Long-term interest rates barely rose in 2017. At the end of 2017, the 10-year interest rate stood at 0,5%. Market analysts of ABN Amro predict that this interest rate in the Netherlands will rise to a maximum of 0,9% at the end of 2018. The interest rate will rise, especially in the second half of 2018. The 2019-year yield is expected to rise slightly further in 10.
The 1 and 3-month Euribor rates will remain negative up to and including 2019. However, these interest rates will rise slightly from -2019% to -0,4% in the second half of 0,2.
Stimulate
The upward pressure of long-term interest rates in particular is caused by the bond purchase strategy of the European Central Bank (ECB). At the end of October, the ECB announced that it would continue buying bonds until September 2018.
However, the monthly purchase amount will be halved from January to €30 billion. The bank is doing this to further stimulate the European economy. The ECB forecasts higher-than-expected economic growth (in 2018 to 2020). Nevertheless, inflation is expected to be only 2020% in 1,7. The ECB aims for an inflation rate of almost 2%.
Euro stable
According to market analysts, the value of the euro against the dollar will not increase in 2018. The euro has clearly appreciated in value in 2017. At the end of 2017, the exchange rate was $1,20 per euro. It is expected that US interest rates will be raised twice this year and economic growth in the United States (US) will be slightly higher than in the euro countries. The euro could therefore fall slightly in value this year.
The euro is expected to strengthen again in 2019, as interest rate differentials between the US and the eurozone will narrow. The ECB will then also raise interest rates, according to ABN Amro.
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