On Thursday, October 20, the Governing Council of the European Central Bank 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 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 Governing 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, October 17, the ECB announced its weekly MRO. The operation was conducted on Tuesday, October 18, and attracted bids from euro area eligible counterparties of €33.43 billion, €0.54 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, October 19, the ECB conducted a seven-day US dollar funding operation through collateralised lending in conjunction with the US Federal Reserve. This operation attracted bids of $3.54 billion, which was allotted in full at a fixed rate of 0.91 per cent.
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 November 17 and January 19, 2017, respectively. Bids of €6 million were submitted for the 28-day bills, with the Treasury accepting €3 million, while bids of €50 million were submitted for the 91-day bills, with the Treasury accepting €22 million. Since €20 million worth of bills matured during the week, the outstanding balance of Treasury bills increased by €5 million, to stand at €255.75 million.
The yield from the 28-day bill auction was -0.393 per cent, down by 0.2 basis points from bids with a similar tenor issued on October 13, representing a bid price of 100.0306 per 100 nominal. The yield from the 91-day bill auction was -0.388 per cent, up by 0.1 basis point from bids with a similar tenor also issued on September 29, representing a bid price of 100.0982 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 182-day bills maturing on November 24 and April 27, 2017, respectively.