France’s interest rate exceeds 2.5%, the highest in eight years

The interest rate of the French 10-year loan, which is a reference on the markets, reached its highest since January 2014 on Tuesday in a context of monetary tightening by central banks.

Shortly after 3:40 p.m., the interest rate for French 10-year debt reached 2.501%, exceeding the highest of the year, previously reached in June (2.47%). To find traces of an interest rate above 2.50%, you have to go back to January 2014.

At the start of the year, it was still hovering around 0.2%, after having been negative for a long time in 2021.

For several weeks, this rate has been recovering sharply: it fell to 1.25% in early August after its first peak in mid-June. But since then, Western central banks have further toughened their stance on inflation, which was 9.1% in August over one year in the euro zone and 8.3% in the United States in the same month.

This rise in rates is under the combined effect of the monetary policies of the European Central Bank and the American Central Bank, recalled during a conference with journalists Alexandre Baradez, an IG analyst.

The speeches of the two institutions are quite similar: we must act quickly and strongly, he develops, explaining this brutal trajectory.

In September, the ECB carried out the largest increase in its main key rate in its history, by 75 basis points. The Fed is preparing to do the same on Wednesday, for the third time in a row, with some analysts even anticipating a rise of 100 basis points.

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The rise in key interest rates has an almost mechanical effect on the financing conditions of businesses, governments and also households. It aims to reduce distributed loans, economic activity and therefore calm the overheating of prices.

All Western countries are affected by this trend: on Monday, the American 10-year bond exceeded 3.5% for the first time since 2011. The German rate, even luckily, also broke its record for the year on Tuesday, 1.952% around 3:55 p.m. , the highest since early 2014 as well.

France’s two-year rate, a chance more sensitive to changes in central bank monetary policies, reached 1.723% around 3:30 p.m., its highest level since November 2011.

source site-96