Decisions, statements & accounts

We use a set of monetary policy tools to steer inflation towards our 2% target. These tools influence both the amount and cost of loans that people and companies can get. We use these tools to influence financing conditions and the level of economic activity in the euro area which in turn affect inflation.

Monetary policy decisionsSchedule of Governing Council meetingsIn detail: how are interest rate decisions passed on to the economy and prices?Monetary policy statementsMonetary policy accounts

Key ECB interest rates

Our primary monetary policy instrument is the set of ECB policy rates. The Governing Council of the ECB sets three rates.

• Deposit facility: The rate on the deposit facility, which banks may use to make overnight deposits with the Eurosystem at a pre-set interest rate.

• Main refinancing operations: The interest rate on the main refinancing operations. In these operations banks can borrow funds from the ECB against broad collateral on a weekly basis at a pre-determined interest rate. This rate is set above the deposit facility rate.
• Marginal lending facility: The rate on the marginal lending facility, which offers overnight credit to banks against broad collateral at a pre-set interest rate. The rate is set above the main refinancing operations rate.

The Governing Council decided in March 2024 that it will continue to steer the monetary policy stance through the deposit facility rate. Short-term money market interest rates are expected to evolve in the vicinity of the deposit facility rate with tolerance for some volatility as long as it does not blur the signal about the intended monetary policy stance.

Current and past key interest rates

Other monetary policy tools

Before the global financial crisis, we mainly conducted monetary policy by setting key interest rates.

Since the financial crisis, the ECB has expanded its set of policy instruments. This has allowed us to influence financing conditions faced by people and companies in difficult times when the malfunctioning of the financial system damaged the transmission mechanism of monetary policy. During these periods, short-term interest rates approached their “effective lower bound”, i.e. the level below which lowering them would no longer increase the level of economic activity. To ensure price stability amid these challenges, we have adapted our toolbox to incorporate new tools, including: 

• offering banks as many central bank loans as they need, against collateral, at a fixed interest rate;
• setting negative interest rates, which encourage banks to lend at low rates so that people and businesses can borrow cheaply;
• offering long-term loans to banks, including loans at very favourable rates, conditional on the amount of lending banks provide to people and businesses (targeted longer-term refinancing operations – TLTROs);
• purchasing private and public financial assets;
• providing “forward guidance”, where we make our intentions for future monetary policy clear.

These additional instruments have served us well and will remain part of our toolbox. They give our monetary policy more space to act against the risk of low inflation or deflation.