Falling interest rates became a pancake – that’s what could open up the economy

Euribor is not calculated. Central banks pledge. No relief is available to the mortgagee.

This is how the news sounded after the ECB’s first interest rate cut. And interest reduction Christine Lagarde Not promising, and many don’t expect much.

Subscribe to Talouselämä’s free newsletter here

However, you can also find a positive interpretation in the shadow of interest rate pessimism. It goes like this: People no longer have irrational fears or pessimistic beliefs that prevent them from borrowing.

That could mean good things for Finland’s economy.

Here comes the psychological shift: Last year, the credit crunch tightened on fears that interest rates could rise no matter how high. This was encouraged not only by the ECB but also by the media.

At the start of the current year, fears of a rise in interest rates faded, but almost immediately, the interest rate market began to speculate on rapid interest rate cuts. Lending and investment decisions were left hanging as people waited for more favorable times in the “if Euribor stays below three percent in half a year” style.

Now expectations are lowered, And the volatility of interest rates has decreased. The outlook is more stable than ever, and financial conditions are gradually easing.

So everyone can safely calculate their borrowing costs so that Euribor rates will be around three percent for the foreseeable future. It could be worse, but it rarely gets better. So why wait?

Support for purchasing decisions Purchasing power has turned upward in Finland, and the economy in the euro area is now starting to grow.

See also  Royal and private flights - this is Lapland's luxury tourism - Kotima

There should be no backsliding caused by uncertainty – in one direction or the other. Everyone has to define a price that they are willing to pay for something.

Good luck negotiating the price.

A recession has led to improved purchasing power in Finland saving, and the Helsinki stock market has not provided a tailwind for savers. A breakthrough may come here as well.

In the world, confirmation of expectations is already seen as an improvement in willingness to take risks. All-time highs in US and European stock indices tell us about this. Industry-focused Helsinki Stock Exchange investments will follow as they move. An increase in property values, on the other hand, improves consumer confidence, and this can translate into strengthening purchasing power.

I hope that after the summer holidays, in Finland we will no longer be afraid of the future, but will read about starting to live again.

Leave a Reply

Your email address will not be published. Required fields are marked *