Interest Rates April 2007

• As expected, the European Central Bank raised its refi rate 0.25 percent to 3.75 percent in early March. After keeping rates steady at 2 percent for more than two years from 2003-2005, the ECB has increased the refi rate 25 basis points seven times since December 2005.
  
  
• The Swiss National Bank stayed in step with the ECB by increasing its 3-month Swiss Libor rate 0.25 percent to 2.25 percent on March 15. Since the end of 2005, the Swiss bank has raised rates 25 basis points six times.
  
  
• The Norges Bank, the central bank of Norway, raised the benchmark deposit rate in March 0.25 percent to 4.0 percent, the fourth such move in five months. The bank has increased rates nine times since June 2005.
  
  
• Denmark’s National Bank’s 2 week CD rate was raised 0.25 percent to 4 percent in March. The move was the first in 2007, and it continues a tightening cycle started in December 2005 when the rate stood at 1.75 percent.
  
  
• The Central Bank of Brazil continued to drop the benchmark Selic rate, as another 25 basis-point decline in March sent the Selic to an all-time low of 12.75 percent. The rate stood at 19.75 percent in August 2005 but has since been reduced 14 times.
  
  
• Bank Indonesia dropped its reference rate for the ninth straight month in March, this time 0.25 percent to 9 percent. The reference rate shot up from 7.4 percent in March 2005 to 12.75 percent in January 2006, but has been declining ever since.
  
  
• The rate decline also continues in Israel, where the Bank of Israel dropped its short-term lending rate 0.25 percent to 4 percent in late February. It was the fifth consecutive month of declining rates, although the short-term rate is still slightly higher than where it was at the end of 2004 (3.7 percent).
  
  
• The Reserve Bank of New Zealand ended a lengthy period of inactivity by increasing its cash rate 0.25 percent to 7.5 percent in early March. New Zealand had not changed the cash rate since December 2005, when it increased 25 basis points to 7.25 percent. The rate hike is only the fourth in nearly three years.