Unfortunately, the intensification of the financial turbulence last fall led to further deterioration in the economic outlook. The Committee responded by cutting the target for the federal funds rate an additional 100 basis points last October, with half of that reduction coming as part of an unprecedented coordinated interest rate cut by six major central banks on October 8.
A recent DNB survey shows that Dutch citizens acknowledge this necessity. The European agreement to narrow the deficit back to below 3% of GDP by 2013 enjoys broad support. But that alone is not enough. In addition, the Netherlands should at least aim to bring the budget close to balance by the end of the new cabinet period.