ECB’s Operational Framework Review: Spread Between MRO and DFR to be Reduced

13 March 2024

By Isabel Teles – FRANKFURT (Econostream) – The spread between the rate on the main refinancing operations (MROs) and the deposit facility rate (DFR) will be reduced from 50bp to 15bp with effect from 18 September 2024, according to a press release published Wednesday by the European Central Bank.

The ECB, which made the announcement in the context of its operational framework review, said, ‘This narrower spread will incentivise bidding in the weekly operations, so that short-term money market rates are likely to evolve in the vicinity of the DFR, and it will limit the potential scope for volatility in short-term money market rates. At the same time, it will leave room for money market activity and provide incentives for banks to seek market-based funding solutions.’

‘The rate on the marginal lending facility (MLF) will also be adjusted such that the spread between the rate on the MLF and the rate on the MROs will remain unchanged at 25bp’, the ECB said.