On June 14, 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 will remain unchanged at 0.00 per cent, 0.25 per cent and -0.40 per cent respectively. The Governing Council expects the key ECB interest rates to remain at their present levels at least through the summer of 2019 and, in any case, for as long as necessary to ensure that the evolution of inflation remains aligned with the current expectations of a sustained adjustment path.
Regarding non-standard monetary policy measures, the Governing Council will continue to make net purchases under the asset purchase programme (APP) at the current monthly pace of €30 billion until the end of September 2018. The Governing Council anticipates that, after September, subject to incoming data confirming the Governing Council’s medium-term inflation outlook, the monthly pace of the net asset purchases will be reduced to €15 billion until the end of December 2018 and that net purchases will then end.
The Governing Council intends to maintain its policy of reinvesting the principal payments from maturing securities purchased under the APP for an extended period of time after the end of the net asset purchases, and in any case for as long as necessary to maintain favourable liquidity conditions and an ample degree of monetary accommodation.
ECB monetary operations
On June 11, the ECB announced its weekly MRO. The operation was conducted on June 12 and attracted bids from euro area eligible counterparties of €1.14 billion, €0.07 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 0.00 per cent, in accordance with current ECB policy. On June 13, 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 $0.10 billion, which was allotted in full at a fixed rate of 2.42 per cent.
During the week under review, participants in the second, fourth, sixth and eighth operations in the first series of targeted longer-term refinancing operations had the option of terminating or reducing their outstanding amount in these operations before maturity. Accordingly, on June 27, a total of €3.52 billion will be repaid.
Domestic Treasury Bill market
In the domestic primary market for Treasury bills, the Treasury invited tenders for 91-day and 181-day bills for settlement value June 14, 2018, maturing on September 13 and December 12 respectively. Bids of €30 million were submitted for the 91-day bills, with the Treasury accepting €20 million, while bids of €25 million were submitted for the 181-day bills, with the Treasury accepting €3 million. Since €20 million worth of bills matured during the week, the outstanding balance of Treasury bills increased by €3 million, to stand at €320 million.
The yield from the 91-day bill auction was -0.356 per cent, down by 0.1 basis point from bids with a similar tenor issued on June 6, representing a bid price of €100.0901 per €100 nominal. The yield from the 181-day bill auction was -0.360 per cent, unchanged from bids with a similar tenor issued on May 31, representing a bid price of €100.1813 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 September 20 and December 20, 2018, respectively.