On Thursday, March 8, the Governing Council of the ECB decided to keep the interest rate unchanged at one per cent on the main refinancing operations (MROs). Interest rates on the marginal lending facility and on the deposit facility were also left unchanged, at 1.75 per cent and 0.25 per cent, respectively.
ECB monetary operations
On Monday, March 5, the ECB announced its weekly MRO. The auction was conducted on Tuesday, March 6, and attracted bids from euro area eligible counterparties of €17.54 billion, €11.93 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 one per cent, in accordance with current ECB policy.
On Tuesday, March 6, the ECB also conducted an auction for a seven-day fixed-term deposit intended to absorb €219.5 billion. This operation is 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 2. 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 one per cent. It attracted bids amounting to €452.12 billion, with the ECB allotting €219.5 billion, or 48.55 per cent, of the total amount bid for. The marginal rate on the auction was set at 0.26 per cent, with the weighted average rate also at 0.26 per cent.
On Wednesday, March 7, 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 $1.60 billion, which were allotted in full at a fixed rate of 0.6 per cent.
Domestic Treasury bill market
In the domestic primary market for Treasury bills, the Treasury invited tenders for 91-day bills maturing on June 8. Bids of €17.5 million were submitted for the 91-day bills, with the Treasury accepting only €9.25 million. Since €3.2 million worth of bills matured during the week, the outstanding balance of Treasury bills increased by €6.05 million, to stand at €206.86 million.
The yield from the 91-day bill auction was 0.855 per cent, i.e. 0.5 basis points higher than that on bills with a similar tenor issued on March 2, representing a bid price of 99.7843 per 100 nominal.
During the week under review, Treasury bill trading on the Malta Stock Exchange amounted to €0.5 million 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 maturing on June 15.