ECB operational daydreaming

First thoughts on the ECB operational review:

Here are the main points from the ECB press release on the outcome of the operational review.

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In line with expectations:

• Floor system will stay, with the deposit rate and not the main refinancing rate remaining the key interest rate;

• ECB to maintain high levels of excess reserves for a long time;

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Dovish:

• 15bps corridor spread between the deposit rate and the main refinancing rate after the September 2024 Governing Council meeting. Currently, the spread is 50bps, while 25bps was mentioned in the press;

• Fixed rate/full allotment and thus no competitive bidding at MRO/LTRO refinancing;

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