On Thursday, March 7, the Governing Council of the European Central Bank (ECB) decided to keep the interest rate on the main refinancing operations (MRO) unchanged at 0.75 per cent. Interest rates on the marginal lending facility and on the deposit facility were also left unchanged at 1.50 per cent and zero per cent, respectively.
ECB monetary operations
On Monday, March 4, the ECB announced its weekly MRO. The auction was conducted the following day and attracted bids from euro area eligible counterparties of €129.80 billion, €1.31 billion lower than the amount bid for in the previous week. The bid amount was allotted in full at a fixed rate equivalent to the prevailing main refinancing rate of 0.75 per cent, in accordance with current ECB policy.
On Tuesday, March 5, the ECB conducted an auction for a seven-day fixed-term deposit intended to absorb €205.5 billion. This operation was designed to sterilise the effect of purchases made under the Securities Markets Programme that were settled but had not yet matured by the previous Friday, March 1. The auction was carried out at a variable rate, with euro area eligible counterparties allowed to place up to four bids at a maximum rate of 0.75 per cent. It attracted bids amounting to €301.6 billion, with the ECB allotting €205.5 billion or 68.14 per cent of the total bid amount. The marginal rate on the auction was set at 0.04 per cent, with the weighted average rate at 0.03 per cent.
On Wednesday, March 6, 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 $0.025 billion, which was allotted in full at a fixed rate of 0.66 per cent.
Domestic Treasury bill market
In the domestic primary market for Treasury bills, the Treasury invited tenders for 90-day bills maturing on June 6. Bids of €48.9 million were submitted, with the Treasury only accepting €2.9 million. Since €13.6 million worth of bills matured during the week, the outstanding balance of Treasury bills decreased by €10.7 million, to stand at €283.20 million.
The yield from the 90-day bill auction was 0.742 per cent, i.e. 1.4 basis points lower than on bills with a similar tenor issued on March 1, representing a bid price of 99.8148 per 100 nominal.
During the week under review, Treasury bill trading on the Malta Stock Exchange amounted to €5,000 and was conducted by the Central Bank of Malta in its role as market-maker.
Today, the Treasury will invite tenders for 91-day bills and 182-day bills, maturing on June 14 and September 13, respectively.