This section presents data on Euribor, Eonia and Eurepo rates, the base rate, reference rate and penalty interest rate confirmed under the Interest Rates Act, yields on Finnish benchmark government bonds and banks' own reference rates. Data on Eurosystem interest rates is available under section ‘Monetary policy instruments’. Data on deposit and lending rates (eg housing loans) is available under section ‘MFI balance sheet and interest rates’.
Euribor (Euro Interbank Offered Rate) is the rate at which euro-denominated lending is offered by one prime bank to another prime bank. Euribor rates are calculated on the basis of quotes provided at 12 am Finnish time on TARGET operating days by approximately 40 large and highest-rated banks operating in the euro area. From Finland, one bank (Nordea) is included in the representative panel of banks. In calculating the Euribor, the highest and lowest 15% of all the quotes are excluded and an unweighted average is calculated for the remaining quotes. Euribor rates are calculated for maturities from 1 week to 12 months on the basis of both act/360 day and act/365 day count conventions.
Eonia (Euro OverNight Index Average) is the value-weighted average interest rate on euro area interbank overnight loans. It is reported on an act/360 day count convention. The European Banking Federation (EBF) and the Financial Markets Association (ACI) are responsible for the calculation methods and publication of both Eonia and Euribor.
Eurepo is the interest rate at which the highest-rated banks offer euro-denominated loans to each other, secured exclusively by government bonds and treasury bills issued by euro area countries. The Eurepo is calculated similarly to the Euribor. Eurepo represents interest rates in the secured markets (repo markets), as opposed to the Euribor, which represents rates in the unsecured markets.
Data on Euribor and Eurepo rates is updated on the Bank of Finland's website on banking days at about 1.50 pm. Data on the Eonia is updated on the next banking day at about 8.00 am.
The base rate is affirmed by the Ministry of Finance each year in June and December, with effect for the next half calendar year. The base rate is the average of 12-month market rates published for the 3-month period prior to the affirmation date, calculated to the accuracy of one-quarter percentage point. Until further notice, the market rate used in the calculation is the 12-month Euribor (act/365 days).
Until the end of 1998, affirmation of the reference rate was based on legislation (284/1995) enacted 3 March 1995, which amended the Interest Rates Act (633/1982); and the Bank of Finland, in practice, set the reference rate. Under other legislation (997/1998) amending the Interest Rates Act, the Ministry of Finance since then affirmed the reference rate. The Interest Rates Act was amended, effective 1 July 2002, so that the responsibility for announcing the rate was transferred back to the Bank of Finland. On the basis of the revised law, the reference rate is the same as the interest rate applied on the last main refinancing operation of the ECB prior to the first calendar day of the half-year in question, rounded up to the nearest one-half percentage point. The affirmed reference rate is then effective for the next six months. The penalty interest rate is the reference rate plus 7 percentage points as stipulated in the Act.
Finnish benchmark government bond yields are calculated as averages of the bid rates quoted by primary dealers on the Reuters system daily at 1.00 pm Finnish time. As from 1 June 2007, the five-year yield on benchmark government bonds is based on quotations for a fixed-rate bullet serial bond maturing on 15 September 2012, and as from 1 May 2008 the ten-year yield is based on quotations for a fixed-rate bullet serial bond maturing on 4 July 2019. More detailed information on the primary dealer system for benchmark government bonds can be obtained from the State Treasury's website. Euro area ten-year government bond yields are calculated in the ECB. Until December 1998, euro area yields were calculated on the basis of harmonised national government bond yields weighted by GDP. Thereafter, the weights have been the nominal outstanding amounts of government bonds.
Banks and bank groups have been allowed to use their own prime rates as reference rates since 1 January 1990.