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      • European Central Bank meeting

      European Central Bank meeting

      When is the next ECB meeting and interest rate announcement?

      The Governing Council’s monetary policy meeting is held every six weeks, with the next meeting scheduled for Thursday 12 March 2021.

      The council’s decisions are always announced via press release at 1.45pm CET on the day of the meeting, followed by an ECB press conference at 2.30pm CET.

       

      ECB meeting schedule

      The Governing Council assembles twice a month in Frankfurt, Germany. It has two types of meetings: a monetary policy meeting, held every six weeks, and a non-monetary policy meeting in which it discusses the other responsibilities of the ECB. The meeting dates for 2020 are as follows.

      ECB meeting calendar 2020

      Monetary policy meeting and announcement Non-monetary policy meeting
      23 January –
      – 19 February
      12 March –
      30 April 1 April
      – 20 May
      4 June* 24 June
      16 July 29 July
      – –
      10 September 23 September
      29 October 7 October
      – 18 November
      10 December 2 December

       

      *not in Frankfurt

       

      What are the key ECB rate decisions?

      The main way the Governing Council seeks to control inflation is by changing key European interest rates, including the minimum bid rate, deposit rate and marginal lending rate.

      1. Minimum bid rate
        The minimum bid rate is the rate national central banks (NCBs) in the eurosystem must charge for one-week loans. This is sometimes referred to as the main refinancing rate or ECB refi rate.This rate is the lowest rate at which commercial banks can borrow capital, effectively acting as the base rate of interest for the eurozone. It has a strong influence on the interest rates charged by commercial banks to businesses and consumers. This, in turn, will affect the amount of spending, borrowing and saving across the economy.
      2. Deposit rate
        The deposit rate is the rate of interest paid on overnight deposits made with NCBs in the eurosystem. If the rate is increased, commercial banks get a better return on money deposited with NCBs. All other things being equal, this should encourage them to deposit more funds with NCBs and give fewer overnight loans to other commercial banks in the system.The opposite is true if the rate goes down – banks get a lower return on any money deposited with the NCBs, which encourages them to deposit less money and give more overnight loans. The deposit rate is therefore another way the Governing Council can influence the supply of money in the economy.
      3. Marginal lending rate
        The marginal lending rate is the rate NCBs must charge commercial banks for overnight loans. These are loans used by banks to meet their reserve requirements for the day, ensuring they have enough cash to meet their clients’ needs.The ECB sets this rate above the minimum bid rate to penalise banks for borrowing emergency funds to meet their reserve requirements. The wider the gap – or corridor – between the marginal lending rate and deposit rate, the greater the penalty. This corridor therefore affects how conservative banks are with their capital, and how willing they are to give loans to commercial and retail clients. This, in turn, affects spending across the economy.

       

      How does the ECB meeting affect traders?

      The ECB’s Governing Council is responsible for setting monetary policy, with the aim of achieving an inflation rate of just under 2% across the euro area. Governing Council meetings are important dates in traders’ calendars as they set the official interest rates for the eurozone.

      The ECB requires national central banks (NCBs) in the eurosystem to use these rates for transactions with commercial banks. The three key rates are:

      • The minimum bid rate: the rate for one-week loans
      • The deposit rate: the rate paid on deposits held with NCBs
      • The marginal lending rate: the rate for overnight loans

      In addition to setting these rates, the Governing Council can also apply quantitative easing (QE) as required. QE involves injecting money directly into the economy with the aim of boosting spending.

      These policies have a strong influence on the interest rates set by commercial banks and other lenders, indirectly affecting spending and inflation across the eurozone.

      Of course, traders and investors are particularly concerned about the impact of ECB policy on demand for stocks, bonds, currencies and other securities, which may cause them to change their strategies. Many traders will therefore try to predict which way monetary policy is heading ahead of each meeting.

      Why is ECB monetary policy important to traders?

      Traders look to gain an understanding of what monetary policy will be in the future. If they can get their predictions right, they can optimise their portfolios ahead of any announcement to maximise their profits and limit losses.

      Traders expect interest rate hikes to cause ripple effects that will reduce the value of their stocks, bonds and other securities, but increase the value of the euro relative to other currencies. Conversely, lower interest rates or the implementation of quantitative easing is likely to have the opposite effect.

      Traders will therefore look at the composition of the Governing Council, the distribution of voting rights between countries, and broader economic factors such as Brexit, to make predictions about which way the ECB will vote.

       

      Who are the key people on the Governing Council?

      There are 21 voting rights to be shared between the 25 representatives on the Governing Council. All six members of the ECB’s executive board get a vote at each meeting and the remaining 15 votes are distributed between two groups:

      • Group 1: This includes the five countries with the largest economies. They share four voting rights, which rotate between countries on a monthly basis
      • Group 2: This includes the remaining 14 countries. They share 11 voting rights, which rotate between countries on a monthly basis

      Analysts look to classify Governing Council members as either monetary hawks or doves with the aim of predicting future policy.

       

      Name Title Monetary outlook2
      Christine Lagarde President of the ECB Neutral
      Luis de Guindos Vice-president of the ECB Dove
      Fabio Panetta Member of the executive board of the ECB Dove
      Isabel Schnabel Member of the executive board of the ECB Hawk
      Yves Mersch Member of the executive board of the ECB Hawk
      Philip R. Lane Member of the executive board of the ECB and ECB chief economist Dove

       

      Name Title Monetary outlook2
      Jens Weidmann President, Deutsche Bundesbank Hawk
      François Villeroy de Galhau Governor, Bank of France (Banque de France) Hawk
      Ignazio Visco Governor, Bank of Italy (Banca d’Italia) Dove
      Pablo Hernández de Cos Governor, Bank of Spain (Banco de España) Dove
      Klaas Knot President, The Dutch Bank (De Nederlandsche Bank) Hawk

       

      Name Title Monetary outlook2
      Pierre Wunsch Governor, National Bank of Belgium (Nationale Bank van België) Neutral
      Madis Müller Governor, The Bank of Estonia (Eesti Pank) Hawk
      Gabriel Makhlouf Governor, Central Bank of Ireland Neutral
      Yannis Stournaras Governor, Bank of Greece (Τράπεζα της Ελλάδος) Dove
      Constantinos Herodotou Governor, Central Bank of Cyprus Dove
      Mārtiņš Kazāks Governor, Bank of Latvia (Latvijas Banka) Neutral
      Vitas Vasiliauskas Chairman of the Board, Bank of Lithuania (Lietuvos Bankas) Neutral
      Gaston Reinesch Governor, Central Bank of Luxembourg (Banque Centrale du Luxembourg) Neutral
      Mario Vella Governor, Central Bank of Malta Neutral
      Robert Holzmann Governor, Oesterreichische Nationalbank Hawk
      Carlos Costa Governor, Bank of Portugal (Banco de Portugal) Neutral
      Boštjan Vasle Governor, Bank of Slovenia (Banka Slovenije) Dove
      Peter Kažimír Governor, National Bank of Slovakia (Národná Banka Slovenska) Dove
      Olli Rehn Governor, Bank of Finland (Suomen Pankki) Dove

       

       

      Start Time

      8:00 am

      August 20, 2015

      Finish Time

      5:00 pm

      December 30, 2021

      Address

      Brussels

      Event Participants

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