On Thursday, July 21, the Governing Council of the European Central Bank decided that the interest rate on the main refinancing operations (MRO), the marginal lending facility and the deposit facility will remain unchanged at zero per cent, 0.25 per cent and -0.40 per cent respectively. The Governing Council continues to expect the key ECB interest rates to remain at present or lower levels for an extended period of time and well past the horizon of the net asset purchases.
Regarding non-standard monetary policy measures, the Government Council confirms that the monthly asset purchases of €80 billion are intended to run until the end of March 2017, or beyond, if necessary, and in any case until it sees a sustained adjustment in the path of inflation consistent with its inflation aim.
ECB monetary operations
On Monday, July 18, the ECB announced its weekly MRO. The operation was conducted on Tuesday, July 19, and attracted bids from euro area eligible counterparties of €43.57 billion, €1.10 billion higher 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 zero per cent, in accordance with current ECB policy.
On Wednesday, July 20, 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 ratio of 0.90 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 91-day and 182-day bills, maturing on October 20, 2016 and January 19, 2017. Bids of €45 million were submitted for the 91-day bills, with the Treasury accepting €15 million, while bids of €35 million were submitted for the 182-day bills, with the Treasury accepting €2 million. Since €27 million worth of bills matured during the week, the outstanding balance of Treasury bills decreased by €10 million, to stand at €300.25 million.
The yield from the 91-day bill auction was -0.300 per cent, down by a 0.3 basis point from bids with a similar tenor issued on July 14, representing a bid price of 100.0759 per 100 nominal. The yield from the 182-day bill auction was -0.297 per cent, also down by 3.7 basis points from bids with a similar tenor issued on June 30, representing a bid price of 100.1504 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 and 91-day bills maturing on August 25 and October 27 respectively.