The ECB Raised Rates by 0.25 Points, and the Six-Month Euribor Has Already Jumped From 2.105 to 2.80 Percent This Year

The European Central Bank raised its three key interest rates by 0.25 percentage points. From 16 September the deposit rate stands at 2.50 percent, the main refinancing operations rate at 2.65, and the marginal lending rate at 2.90 percent. This is the second increase since June, when the ECB began tightening monetary policy again after a three-year pause.

For someone in Skopje with a euro-denominated mortgage, all of this comes down to one number - Euribor.

The six-month Euribor stood at 2.105 percent at the start of this year. By 9 September it had already reached 2.80. Since the beginning of July alone it has risen from 2.554 to around 2.8 percent. On loans with a variable rate tied to that benchmark, this means a higher monthly instalment at the next scheduled reset.

It does not apply to everyone, but that is no comfort either

On fixed-rate contracts there is no automatic change. On variable ones it depends on which benchmark the contract names, how big the bank's margin is, and how often the bank resets the rate. A loan that is revised every six or twelve months will only feel the new rate when the agreed date arrives.

So the effect will not land on the same day for everyone, but in sequence. That is an important difference in practice, though not in direction - the rise in Euribor already shows that the European banking market has been pricing in higher rates for some time.

Why a rate set in Frankfurt is felt in Skopje

The denar is stable against the euro, and that is precisely why decisions from Frankfurt are not somebody else's news. It does not mean the National Bank will automatically follow every ECB move, but a longer stretch of high European rates narrows the room for a quick cut in domestic ones.

The reason for the whole tightening is energy. In August, annual inflation in the eurozone reached 3.3 percent, against 2.9 in July - the highest rate since September 2023. Energy inflation rose from 10.3 to 14.3 percent, with crude oil supply constrained by the fighting around the Strait of Hormuz. The price of Brent crude again passed the 100-dollar-a-barrel mark.

What is interesting is that the price rise is not, so far, spilling evenly into the rest of the economy. Core inflation, which excludes energy, food, alcohol and tobacco, fell from 2.5 to 2.4 percent. Services inflation dropped from 3.3 to 3 percent. ECB economists estimated that around 90 percent of the rise in energy inflation between January and May was driven by supply-side factors.

That is a fundamental difference from the waves of 2021 and 2022, when demand and fiscal measures also played a larger role. Now the problem sits on the supply side - and an interest rate is a tool that acts on demand.

The ECB expects average inflation of 3 percent this year, 2.5 in 2027 and 2.1 in 2028. The forecasts for the coming years have been revised upward from the June ones. The bank did not signal in advance whether another increase will follow - decisions will be made on incoming data.

For anyone paying an instalment tied to Euribor, that means the next reset says more than any press release.