Structural longer-term refinancing operations could be introduced once Main Refinancing Operations demand hits €100-125bn, Rabobank analysis suggests.
The European Central Bank is considering structural Longer-Term Refinancing Operations (LTROs) to address declining excess liquidity. These 12-month LTROs, likely auctioned via variable-rate tenders, may be introduced when Main Refinancing Operations (MROs) demand reaches €100-125bn.
Historical data indicates LTROs could start at this threshold, with the smallest 3-month LTRO tender previously at €15 billion when MRO demand was at least €100 billion. The ECB may discuss design details in Q4 or early next year, with a potential launch in 2027, contingent on banks’ reserve demand.
The move aims to slightly flatten EUR money market term rates but may not fully offset quantitative tightening effects.