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ECB: Interest Rates at Record Low in January

Interest rates in the euro zone remained low through January, the European Central Bank reported on March 3rd. Loans by commercial banks to non-financial corporations averaged an annualized rate of 1.43%, the same as in October last year and only marginally up from November (1.39%) and December (1.36%). The average interest rate on loans to […]
  • Sven R. Larson
  • — March 11, 2022
Interest rates in the euro zone remained low through January, the European Central Bank reported on March 3rd. Loans by commercial banks to non-financial corporations averaged an annualized rate of 1.43%, the same as in October last year and only marginally up from November (1.39%) and December (1.36%). The average interest rate on loans to […]
  • Sven R. Larson
  • — March 11, 2022

Interest rates in the euro zone remained low through January, the European Central Bank reported on March 3rd. Loans by commercial banks to non-financial corporations averaged an annualized rate of 1.43%, the same as in October last year and only marginally up from November (1.39%) and December (1.36%). 

The average interest rate on loans to non-financial corporations has remained below 1.5% for a full year, with the exception of April last year (1.56%). Over the longer term, the average rate has declined since March 2014 when it stood at 3.01%. 

Interest rates on home-buying loans for households, a.k.a., mortgage loans, have followed the same pattern as corporate loans. After averaging 3% in March 2014, these loans dropped below 2% in June 2016 and currently (January 2022) stand at 1.33%. 

With interest rates on loans at historic lows, commercial banks offer negative interest on deposits. As of January 2022, euro-zone banks paid an average of -0.3% on agreed-maturity deposits by non-financial corporations, marking the eighth month in a row with at rate at or below that figure. 

Interest on deposits have been consistently negative since November 2019. April 2013 was the last month when deposit rates exceeded 1%.

Households still earn a positive rate on their bank deposits. In January this year, the average annualized rate was 0.24%. This is very close to its average rate since it fell below 0.3% in April 2020. Following the pattern of other interest rates, the rate on household deposits has fallen steadily since 2013, the last time it stood above 2% (May, 2.06%).

Sven R. Larson is a political economist and author. He received a Ph.D. in Economics from Roskilde University, Denmark. Originally from Sweden, he lives in America where for the past 16 years he has worked in politics and public policy. He has written several books, including Democracy or Socialism: The Fateful Question for America in 2024.
  • Tags: European Central Bank, interest rates

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