On Thursday, September 6, the Governing Council of the 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.
On the same day, the Governing Council of the ECB also decided on a number of technical features regarding the Eurosystem’s outright transactions in secondary sovereign bond markets that aim at safeguarding an appropriate monetary policy transmission and the singleness of the monetary policy.
These will be known as Outright Monetary Transactions and will be conducted within a specified framework.
ECB monetary operations
On Monday, September 3, the ECB announced its weekly MRO. The auction was conducted on Tuesday, September 4, and attracted bids from euro area eligible counterparties of €126.33 billion, €5.15 billion lower than the bid amount in the previous week.
The 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, September 4, the ECB also conducted an auction for a seven-day fixed-term deposit intended to absorb €209 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, August 31.
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 €460.89 billion, with the ECB allotting €209 billion, or 45.35 per cent, of the total bid amount. The marginal rate on the auction was set at 0.01 per cent, with the weighted average rate also set at 0.01 per cent.
On Wednesday, September 5, 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 $2.22 billion, which was allotted in full at a fixed rate of 0.63 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 October 5 and December 7, respectively. Bids of €8 million were submitted for the 28-day bills while bids of €7.7 million were submitted for the 91-day bills, with the Treasury accepting the full amount in both tenors. Since €22.75 million worth of bills matured during the week, the outstanding balance of Treasury bills decreased by €7.05 million, to stand at €285.04 million.
The yield from the 28-day bill auction was 1.102 per cent, i.e. 0.3 basis point higher than that on bills with a similar tenor issued on August 31, representing a bid price of 99.9144 per 100 nominal. The yield from the 91-day bill auction was 1.213 per cent, i.e. 0.2 basis point higher than on bills with a similar tenor issued on August 31, representing a bid price of 99.6943 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 and 91-day bill maturing on October 12 and December 14, respectively.