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EMU ECB Interest Rate Decision

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It might seem simple – a change in the interest rate causes a sharp reaction of the markets, but not with the ECB, because this is the most insidious report – it is probably more insidious than even the American labor market (NFP). By the way, no interest rate is published in this report.

Features of the publication

Very complex for trading
Monitor the movements before release
Very strong slippage
Unprecise release
Three rates at a time
ECB press conference

How to trade EMU ECB Interest Rate Decision

EURUSD grows if the data are released above the forecasts, and vice versa.

Excitement for the meeting and the subsequent decision of the European Central Bank is quite large because it is not just the publication of the report, but also the ongoing ECB Press Conference, where the Bank's governor communicates directly with the press.

The time of the interest rate publication is quite moody, at least because the ECB has three rates:

  • Main Refinancing Rate
  • Deposit Rate
  • Marginal Lending Rate

The main of them is Maintain Main Refinancing Rate, while all the rest are secondary. If one of them changes, it causes movement on the market. Please note that their values may vary. For example, two of the above interest rates are expected to change, but in fact only one changes: on the one hand, the monetary policy has changed, but on the other hand, it is not what the market expected. Since the traders are confused, a "saw" movement occurs. The saw cuts the stops and kicks the traders out with losses.

Besides, in addition to interest rates, the ECB can also regulate its easing program, while the Central Bank additionally pours liquidity to the markets – in plain language, turns on its printing press. The volumes of such programs can vary depending on the situation, which triggers a change in the Euro rate. There can also be conflicts of opinion between the easing program and the size of interest rates. For example, the interest rate was expected to change, but the rate remained the same, while the easing program was changed (QE). Once again – a saw...

The first blow to quotations may come not just from the volume of easing and the size of rates, but also from accompanying minutes, in which there may be changes in the ECB inflation expectations (for instance), despite the stability of interest rates, which also leads to the movement of the European currency quotations.

As a rule, the speech of the ECB governor is the second and the main blow. Each word will be further examined by the markets at a press conference, which will take place 45 minutes after the publication of the ECB decision. The press conference often sets the basic and principal fundamental background for the near future of the EUR level.

Online broadcast of the press conference can be watched in a public domain – for example, on YouTube.

Please note that the ECB interest rates publication is an unprecise report, it may be released later or earlier (within five minutes from the set time). Sometimes the report can arrive with a delay! To protect yourself, please watch the movement closely before the release: if the data have not yet arrived, but EUR has already "gone far enough", the best solution might be to abandon trading.


Slippage. Due to the complexity of the report, liquidity can vary significantly, which may lead to the high probability of slippage of your market order.

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