On October 26, 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 0.0 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, purchases under the asset purchase programme (APP) will continue at the current monthly pace of €60 billion until the end of December. From January 2018, the net asset purchases are intended to continue at a monthly pace of €30 billion until the end of September 2018, 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. 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 APP in terms of size and/or duration.
Also, the Eurosystem will reinvest the principal payments from maturing securities purchased under the APP for an extended period of time after the end of its net asset purchases and in any case for as long as necessary. This will contribute both to favourable liquidity conditions and to an appropriate monetary policy stance.
Additionally, the MROs and the three-month longer-term refinancing operations will continue to be conducted as fixed rate tender procedures with full allotment for as long as necessary, and at least until the end of the last reserve maintenance period of 2019.
ECB monetary operations
On October 23, the ECB announced its MRO. The operation was conducted on October 24 and attracted bids from euro area eligible counterparties of €5.31 billion, €1.49 billion higher 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 October 25, the ECB conducted a three-month, longer-term refinancing operation to be settled as a fixed rate tender procedure with full allotment, with the rate fixed at the average rate of the MROs over the life of the operation. The operation attracted bids of €2.50 billion from euro area eligible counterparties. The amount was allotted in full in accordance with current ECB policy.
Also on October 25, 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 $0.04 billion, which was allotted in full at a fixed rate of 1.65 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 for settlement value October 26, maturing on November 23 and January 25, 2018, respectively. Bids of €40 million were submitted for the 28-day bills, with the Treasury accepting €10 million, while bids of €78 million were submitted for the 91-day bills, with the Treasury accepting €20 million. Since €7 million worth of bills matured during the week, the outstanding balance of Treasury bills increased by €23 million, to stand at €144.40 million.
The yield from the 28-day bill auction was -0.379 per cent, unchanged from bids with a similar tenor issued on October 19, representing a bid price of €100.0295 per €100 nominal. The yield from the 91-day bill auction was -0.358 per cent, down by 0.2 basis point from bids with a similar tenor issued on August 31, representing a bid price of €100.0906 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 November 30 and February 1, 2018, respectively.