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The main refinancing rate indicator in the eurozone
The main refinancing rate indicator measures the interest rate charged by major commercial banks in the eurozone on major refinancing operations (usually from the European Central Bank). It is also called the EURIBOR rate.
And when the index is issued at a rate higher than expected, this means that interest rates are on the rise, which causes more difficulty for companies to obtain loans and financing. While higher interest rates are supposed to reduce inflation.
And when the index is issued at a rate lower than expected, this means that prices are declining, which facilitates the process of obtaining loans and financing for companies. Low interest rates also help stimulate economic growth. But it could lead to concerns about rising inflation.
How does the main refinancing rate indicator in the eurozone affect the trading of the euro in the forex market?
The main refinancing rate indicator in the eurozone has a significant impact on the trading of the euro in the forex market. Where it can affect the demand for the European currency in the following way:
• When the index is issued at a rate higher than expected, this indicates high interest rates in the Eurozone. This, in turn, makes the euro a more attractive currency for investors because capital owners will resort to it to earn a higher return. This leads to a strengthening of the euro’s value.
• On the contrary, the issuance of the index at a rate less than expected indicates low interest rates in the euro area, which makes the European currency less attractive to investors. This weakens the value of the euro against other currencies.
• The higher the interest rates in the euro area, the greater the demand for and strength of the euro, and vice versa. Therefore, the key refinancing rate indicator is an important component that traders watch to determine the direction of the euro.
The entity that issues the Master Refinancing Rate (MRR)
The MRR is reviewed and set by the ECB’s Governing Council at regular intervals, usually on a monthly basis. The current MRR is publicly available on the ECB’s website, along with information on any rate changes and the reasons behind them.
When is the key refinancing rate (MRR) released?
It is published 8 times a year
Next release date
Jul 18, 2024
