Euribor Continues to Rise; Analysts Do Not Rule Out Another ECB Rate Hike
The six-month Euribor has exceeded 2.7%, the highest level in a year and a half. Experts suggest the European Central Bank may raise key interest rates again this year.
The six-month Euribor, the key reference rate for housing loans in Estonia, has risen above 2.7% this week, reaching its highest point in the last 18 months. According to Estonian public broadcaster ERR, the increase continues amid inflation expectations and rising oil prices.
Lenno Uusküla, chief economist at Luminor bank, notes that while the six-month rate is rising, the annual rate remains higher, indicating a possible further increase. He expects Euribor to rise a bit more before the situation stabilizes.
Previously, markets expected only one rate hike from the European Central Bank this year, which occurred in June. However, analysts now do not rule out a second hike. Uusküla suggests it could happen in late summer or autumn, with a negative scenario potentially involving two additional hikes.
Rain Leesi, investment manager at Avaron, explains that markets are already pricing in one additional hike, which is reflected in Euribor levels. This means that if such a hike occurs, Euribor should not rise further. The question remains whether another hike will follow.
So far, the rise in Euribor has not significantly reduced Estonians' interest in loans, although some borrowers are already facing higher monthly payments.
