Deposit Facility Rate
The rate the ECB pays euro-area banks on overnight deposits at the Eurosystem — since 2022 the rate through which the ECB steers short-term euro rates.
Also called: ECB deposit rate, ECB policy rate.
The euro area runs a corridor with three rates: the deposit facility at the bottom, the main refinancing rate in the middle, and the marginal lending facility at the top. With excess liquidity abundant, market rates sit against the floor, so the DFR is the rate that actually bites.
Between 2014 and 2022 the DFR was negative — banks paid to park money at the ECB. That was a deliberate attempt to push liquidity out of the deposit facility and into lending, and it makes the euro area the largest experiment in negative policy rates ever run.
The ECB narrowed the MRO–DFR spread in 2024 as part of its operational framework review, tightening the corridor around the floor.
The mechanics
- Who receives it
- Euro-area credit institutions on overnight deposits with their national central bank.
- What it anchors
- €STR and the whole short end of the euro curve.
- US analogue
- IORB — the same job, done for banks that can hold reserves.
The common misreading
That a negative DFR was a tax on savers. It applied to banks' balances at the central bank, not to household deposits; whether banks passed it on was a separate commercial decision, and for retail depositors they mostly did not.
Related terms
- Main Refinancing OperationsThe ECB's regular weekly collateralised lending to euro-area banks, and the rate charged on it — historically the Eurosystem's principal source of liquidity.
- Euro Short-Term RateThe ECB's benchmark for unsecured overnight borrowing costs of euro-area banks, computed from reported money market transactions and the replacement for EONIA.
- Interest on Reserve BalancesThe rate the Federal Reserve pays banks on the reserves they hold with it — the administered rate that anchors the floor of the US policy corridor for banks.
Primary sources
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