How Central Banks Use Standing Facilities to Anchor Rates

Monetary Policy Explained with Fexingo: Central Banks, Money Supply, and Interest Rates · Jun 17, 2026 · 8m · transcript

Episode 56 of Monetary Policy Explained with Fexingo dives into standing facilities—the lending and deposit windows central banks use to keep short-term interest rates within a target corridor. Lucas and Luna unpack how the European Central Bank's marginal lending facility and deposit facility create a rate ceiling and floor, using a real example from June 2026 when the ECB narrowed its corridor by 10 basis points to tighten policy. They explain why the Federal Reserve's discount window and interest on reserves serve a similar function, and how the Bank of England's operational…