Rabobank: Could the ECB raise the minimum reserve requirement?

3 July 2026 Summary - The ECB is reportedly considering raising the minimum reserve requirement from 1% to 2%. - This seems to be driven by a cost-reduction exercise. The change would roughly offset the additional interest costs of the June rate hike. - Implications for the policy stance are probably minimal. But increasing the reserve requirement would accelerate the switch from abundant to ample liquidity by 4 to 5 months. - This could see a further cheapening of repo rates, and it may put further narrowing pressure on short-dated swap spreads. Continue Reading