On March 9, 2017, 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 (DFR) 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 confirmed that it will continue to make purchases under the asset purchase programme (APP) at the current monthly pace of €80 billion until the end of March. From April, the net asset purchases are intended to continue at a monthly pace of €60 billion until the end of December, or beyond, if necessary, and in any case until the Governing Council sees a sustained adjustment in the path of inflation consistent with its inflation aim. The net purchases will be made alongside reinvestments of the principal payments from maturing securities purchased under the APP. If the outlook becomes less favourable, or if financial conditions become inconsistent with further progress towards a sustained adjustment in the path of inflation, the Governing Council stands ready to increase the programme in terms of size and/or duration.
ECB monetary operations
On March 6, the ECB announced its weekly MRO. The operation was conducted on March 7 and attracted bids from euro area eligible counterparties of €23.88 billion, €1.37 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 zero per cent, in accordance with current ECB policy.
On March 8, 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 $0.92 billion, which was allotted in full at a fixed rate of 1.19 per cent.
Domestic Treasury bill market
In the domestic primary market for Treasury bills, the Treasury invited tenders for 91-day and 182-day bills for settlement value March 9, maturing on June 8, and September 7, respectively. Bids of €40 million were submitted for the 91-day bills, with the Treasury accepting €8 million, while bids of €20 million were submitted for the 182-day bills, with the Treasury accepting €4 million. Since €20 million worth of bills matured during the week, the outstanding balance of Treasury bills decreased by €8 million, to stand at €244.20 million.
The yield from the 91-day bill auction was -0.350 per cent, unchanged from bids with a similar tenor issued on March 2, representing a bid price of €100.0886 per €100 nominal. The yield from the 182-day bill auction was –0.352 per cent, up by 2.7 basis points from bids with a similar tenor issued on March 2, representing a bid price of €100.1783 per €100 nominal.
During the week under review, there was no trading on the Malta Stock Exchange.
Today the Treasury will invite tenders for 91-day and 182-day bills maturing on June 15, and September 14, respectively.