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The European Central Bank (ECB) has cut interest rates again, with the aim of stimulating the slowing European economy. This is the third rate cut in a short period of time. With the lower interest rates, the ECB wants to encourage companies to invest more and motivate consumers to save less and spend more.
The measure is therefore intended to revive economic growth in the euro countries.
These recent cuts follow a phase where the ECB raised interest rates at a rapid pace. A few years ago, the central bank was forced to take aggressive measures to curb rapidly rising inflation. The positive news is that price increases are now largely under control.
Although inflation remained below the desired 2 percent level for the first time in a long time last month, the ECB expects it to increase slightly in the coming months due to wage increases, among other things.
A rate cut can have negative effects on pensions. Indeed, it will be more difficult for pension funds to increase pensions next year.
This is because funds must first build up sufficient reserves to meet their future obligations. When the ECB cuts interest rates, funds must keep more assets in reserve, so there is less room for an increase in pensions.
Several funds have already announced recently that they will not participate in a pension increase next year. However, the ABP (civil service pension fund) is considering indexing. A final decision will be made later this year, with the calculation rate playing an important role.
When the ECB cuts interest rates, banks receive less compensation for storing their money with the central bank. This often has the direct result that the savings rate for customers also falls. This is because banks adjust their rates, so that the savings rate on savings can be lower.
“It's important to now think carefully about how you can make your savings pay off best. We recommend looking at alternative forms of savings or investments that match your risk profile. ”
In addition, the ECB decision may affect mortgage rates, which have been falling again recently. Whether mortgage rates will fall further is still uncertain. Banks and other lenders may have already incorporated the ECB's interest rate cut into their rates, but savings rates may still come under further pressure.
At Van Loon, we understand that the financial market is constantly changing and that changes such as the interest rate reduction can affect both individuals and entrepreneurs. Whether it concerns your savings rate, mortgage, or pension. We are ready to advise and support you in making the right choices. Fill in your details and we will contact you as soon as possible. Our advisors will help you quickly and effectively, so that you can take full advantage of current interest rates and secure your financial future.