Monetary policy decisions
At today's meeting the Governing Council of the ECB took the following monetary policy decisions:
The interest rate on the main refinancing operations of the Eurosystem will be raised by 0.50 percentage point to 4.25% and applied in the two operations (which will be conducted as fixed rate tenders) to be settled on 15 and 21 June 2000.
The interest rate on the marginal lending facility will be raised by 0.50 percentage point to 5.25% with effect from 9 June 2000.
The interest rate on the deposit facility will be raised by 0.50 percentage point to 3.25%, with effect from 9 June 2000.
Starting from the operation to be settled on 28 June 2000, the main refinancing operations of the Eurosystem will be conducted as variable rate tenders, applying the multiple rate auction procedure. The Governing Council has decided to set a minimum bid rate for these operations equal to 4.25%. This is the same rate as that which will prevail for the two fixed rate tenders to be implemented following today's decision.
The switch to variable rate tenders in the main refinancing operations is not intended as a further change in the monetary policy stance of the Eurosystem. The new tender mechanism is a response to the severe overbidding which has developed in the context of the current fixed rate tender procedure. For the purpose of signalling the monetary policy stance, the minimum bid rate is designed to play the role performed, until now, by the rate in fixed rate tenders. This change does not in any way rule out the option that, in the future, the main refinancing operations of the Eurosystem may be conducted in principle as fixed rate tenders.
The time available until implementation of the new tender procedure as from the first main refinancing operation of the maintenance period starting on 24 June 2000 will help counterparties to prepare for the change.
In accordance with Article 8 of the Regulation (EC) No. 2818/98 of the European Central Bank of 1 December 1998 on the application of minimum reserves (ECB/1998/15), the marginal interest rate of the main refinancing operation is used to calculate the remuneration of required reserves.
The President of the ECB will comment on the considerations underlying these decisions at a press conference starting at 2.30 p.m. today.
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