On Thursday, October 2, the Governing Council of the European Central Bank (ECB) decided that the interest rate on the main refinancing operations (MRO) and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 0.05 per cent, 0.30 per cent and -0.20 per cent respectively.
Also on Thursday, October 2, the Governing Council of the ECB agreed on key operational details of its new programmes to buy simple and transparent asset-backed securities (ABSs) and a broad portfolio of euro-denominated covered bonds. Together with the targeted longer-term refinancing operations, the purchase programmes will further enhance the transmission of monetary policy. They will facilitate credit provision to the euro area economy, generate a positive spillover to other markets and, as a result, ease the ECB’s monetary policy stance.
The following are the details of the new programmes:
• The programmes will last at least two years;
• They will enhance transmission of monetary policy, support provision of credit to the euro area economy and, as a result, provide further monetary policy accommodation; the Eurosystem collateral framework is the guiding principle for eligibility of assets for purchase;
• The asset purchases will start in fourth quarter of 2014, commencing with covered bonds in the second-half of October.
ECB monetary operations
On Monday, September 29, the ECB announced its weekly MRO. The auction was conducted on Tuesday, September 30, and attracted bids from euro area eligible counterparties of €89.07 billion, €1.23 billion lower than the bid amount of the previous week. The amount was allotted in full at a fixed rate equivalent to the prevailing MRO rate of 0.05 per cent, in accordance with current ECB policy.
On Wednesday, October 1, the ECB conducted a seven-day US dollar funding operation through collateralised lending in conjunction with the US Federal Reserve. This operation was carried out at a fixed rate of 0.58 per cent and did not attract bids from euro area eligible counterparties.
Domestic Treasury bill market
In the domestic primary market for Treasury bills, the Treasury invited tenders for 28-day and 91-day bills maturing on October 31 and January 2, 2015, respectively. Bids of €21 million were submitted for the 28-day bills, with the Treasury accepting €11 million, while bids of €36 million were submitted for the 91-day bills, with the Treasury accepting €24 million. Since €26.50 million worth of bills matured during the week, the outstanding balance of Treasury bills increased by €8.50 million, to stand at €317.07 million.
The yield from the 28-day bill auction was 0.036 per cent, i.e. 16.4 basis points lower than on bills with a similar tenor issued on August 8, representing a bid price of 99.9972 per 100 nominal. The yield from the 91-day bill auction was 0.090 per cent, i.e. 2.20 basis points higher than on bills with a similar tenor issued on September 26, representing a bid price of 99.9773 per 100 nominal.
During the week under review, there was no trading on the Malta Stock Exchange.
Today the Treasury will invite tenders for 28-day bills maturing on November 7.