On July 20, the Governing Council of the European Central Bank 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 zero 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 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 confirms that the net asset purchases, at the current monthly pace of €60 billion, are intended to run 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 are made alongside reinvestments of the principal payments from maturing securities purchased under the asset purchase programme. 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 July 17, the ECB announced its weekly MRO. The operation was conducted on July 18 and attracted bids from euro area eligible counterparties of €6.83 billion, €0.28 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 July 19, 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 $0.09 billion, which was allotted in full at a fixed rate of 1.66 per cent.
Domestic Treasury bill market
In the domestic primary market for Treasury bills, the Treasury invited tenders for 91-day bills for settlement value July 20, maturing on October 19. Bids of €45 million were submitted, with the Treasury accepting €10 million. Since €17 million worth of bills matured during the week, the outstanding balance of Treasury bills decreased by €7 million, to stand at €172.40 million.
The yield from the 91-day bill auction was -0.341 per cent, unchanged from bids with a similar tenor issued on July 13, representing a bid price of €100.0863 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 and 91-day bills maturing on August 24 and October 26 respectively.