ECB Interest Rate Decision
- Location: EU
- Currency: EUR
This event starts in:
The European Central Bank’s Interest Rate Decision is made by the Governing Council of the ECB every six weeks, during a meeting on monetary policy, and is announced right after the meeting. This is one of the most important macroeconomic events in the eurozone, which can affect the euro quotes.
Along with the rate on deposit facility, ECB’s key interest rates also include the rate on the main refinancing operations and the rate on the marginal lending facility. The refinancing rate normally provides the bulk of liquidity to the eurozone’s financial system and affects the lending activity in the region. It represents the minimum possible interest rate, which banks indicate in bids for liquidity in ECB tenders. The ECB provides liquidity with a fixed refinancing rate through such tenders.
The ECB takes the decision on the refinancing rate depending on the inflationary outlook and economic growth. The lower the rate, the cheaper it is for commercial banks to borrow money from the ECB, so rates on consumer and business loans are lower. Thus, lowering of the refinancing rate cheapens the euro and accelerates inflation processes, providing the balk of liquidity to the banking system.
Lowering of the ECB interest rate is seen as negative for the euro. If the ECB raises the refinancing rate, this leads to an increase in euro quotes.
