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News Release


Official European Central Bank Refi Rate Increase to 1.25%

Jones Lang LaSalle reaction to first rise since May 2009

London, 7 April 2011 -  As widely expected, the European Central Bank (ECB) today raised the main refinancing (refi) rate by 25 bps to 1.25 percent. They also lifted other key rates by 25 bps, leaving the interest rate "corridor" unchanged. This is the first change of official rates in the Euro area since May 2009.

Grant Fitzner, Head of EMEA Research at global commercial real estate firm Jones Lang LaSalle, commented: “It is unusual for the ECB to lead the rate tightening cycle, ahead of the Federal Reserve and other major central banks. This reflects a desire to start to normalise interest rates and remove their crisis premium, as well as concerns about rising inflation expectations.”

“Europe’s broad-based economic recovery has been mirrored in the commercial real estate market. Total gross returns for retail property in the Euro area rose by 13.5% last year, while for office property returns were up 19.1%. We expect further solid gains in 2011.”

“While an aggressive tightening cycle would be expected to dampen the pace of recovery in the property sector, the gradual normalisation of rates announced today has been widely anticipated and will have a modest impact. Provided the European recovery remains on track we expect two further 25 bps increases this year, leaving the refi rate at a still low 1.75 percent by year-end.”