As part of the European Central Bank’s first targeted refinancing operation, commercial banks on Thursday secured around €83 billion worth of fresh central bank liquidity, which was markedly less than expected.

In the meantime, across the Atlantic, the Federal Reserve policymakers signalled they won’t be raising interest rates anytime soon while suggesting they would tighten credit at a faster pace once the lift-off has begun. In fact, as had been expected by most investors, the Federal Open Market Committee (FOMC) decided to further cut back on its bond purchases.

Starting from October onwards, mortgage backed securities and treasury purchases will be equally reduced by $5 billion to $5 billion and $10 billion per month respectively. If the economy and the labour market develop as currently expected by the FOMC, bond purchases will cease at the next meeting at the end of October.

The euro area inflation rate was higher than initially estimated in August, while remaining at the weakest level in almost five years. Annual consumer-price growth was 0.4 per cent versus estimate of 0.3 per cent. Core inflation, which strips out volatile items such as energy, food, tobacco and alcohol, stood at 0.9 per cent in August, compared with 0.8 per cent the previous month. The cost of services rose 1.3 per cent, matching the July reading. The cost of energy decreased two per cent from a year earlier after a percentage point decline in July.

The Scottish referendum resulted in a clear victory against independence, with the vote leading by 55 per cent. Following this news the pound has hit a two-year high against the euro and a two-week high against the US dollar.

Meanwhile, Royal Bank of Scotland confirmed it would not be moving its registered head office now that independence had been rejected. According to most analysts the result reduced the risk of the UK leaving the EU, a referendum that should follow in the coming years.

This article was compiled by Bank of Valletta for general information purposes only.