The National Bank of Belgium published research on how the Belgian economy responded to the energy-driven inflation surge and the European Central Bank’s rapid interest-rate increases in 2022–2023, concluding that the shock was largely absorbed across key sectors but with emerging strains in housing activity and public finances. Banks’ funding costs rose only modestly because Belgian banks rely mainly on deposits whose rates increased gradually, while higher rates on new lending to households and firms supported profit margins. Households reallocated savings from current and savings accounts into term deposits and the one-year State note issued in September 2023 offering a 3.30% gross yield. Higher mortgage rates cooled the housing market and reduced construction, but house prices did not fall, which the study links to longer mortgage maturities and wage indexation, improving affordability for existing fixed-rate borrowers while worsening it for new buyers. The inflation shock affected households unevenly in 2022, with low-income households benefiting from wage and benefit indexation but cutting other spending due to higher energy costs, while middle- and higher-income households drew more on savings. Firms maintained profits and investment, supported by wage moderation, strong liquidity buffers and lower debt levels built up during the low interest-rate period. Rising interest costs and persistent deficits added pressure on Belgium’s public finances, raising concerns about the long-term sustainability of public debt.
National Bank of Belgium 2025-11-18
National Bank of Belgium study finds deposit-funded banks and wage indexation cushioned the 2022–2023 inflation and rate shocks while public finance pressures intensified
The National Bank of Belgium's research shows the economy absorbed 2022–2023 energy-driven inflation and ECB interest-rate hikes, though housing and public finances faced strains. Banks' funding costs rose modestly, with higher lending rates boosting profits. The study notes uneven household impacts, with low-income groups benefiting from wage indexation but reducing spending, and concerns about public debt sustainability due to rising interest costs and persistent deficits.