Open market operations

Open market operations are the ECB's most important instrument for steering the money supply and interest rates.

Types of open market operations:

1. Main refinancing operations (MRO):

• Weekly lending to banks against collateral
• Term: 1 week
• The MRO rate is THE key interest rate of the ECB
• Currently (2025/2026): approx. 2.65% (after rate cuts)

2. Longer-term refinancing operations (LTRO):

• Lending with longer terms (3 months to 3 years)
• TLTRO (targeted LTRO): earmarked loans to boost lending

3. Securities purchases (QE / APP):

• The ECB buys government and corporate bonds on the market
• Pumps money directly into the economy
• 2015–2022: the ECB bought over 5 trillion euros' worth of bonds
• Since 2023: reduction of holdings (quantitative tightening)

How it works:

• ECB buys bonds = more money in circulation = lower interest rates = boost the economy
• ECB sells bonds = less money in circulation = higher interest rates = fight inflation

For you as a private individual:

The ECB's open market operations indirectly determine:
• Your mortgage rate (if key rates fall, home financing gets cheaper)
• Your instant-access savings rates (rise with the deposit rate)
• Your purchasing power (QE can fuel inflation)