On December 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 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 from January 2018 it intends to continue to make net asset purchases under the asset purchase programme (APP), 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. 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.
ECB monetary operations
On December 11, the ECB announced its weekly MRO. The operation was conducted on December 12 and attracted bids from euro area eligible counterparties of €1.92 billion, €0.34 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 December 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 $0.05 billion, which was allotted in full at a fixed rate of 1.91 per cent.
Domestic Treasury bill market
In the domestic primary market for Treasury bills, the Treasury invited tenders for 91-day and 363-day bills for settlement value December 14, maturing on March 15 and December 12, 2018, respectively. Bids of €20 million were submitted for the 91-day bills, with the Treasury accepting €2.50 million, while bids of €30 million were submitted for the 363-day bills, with the Treasury accepting €2 million. Since €12 million worth of bills matured during the week, the outstanding balance of Treasury bills decreased by €7.50 million, to stand at €190.40 million.
The yield from the 91-day bill auction was -0.355 per cent, up by 2.0 basis points from bids with a similar tenor issued on December 7, representing a bid price of €100.0898 per €100 nominal. The yield from the 363-day bill auction was -0.300 per cent, down by 11.1 basis points from bids with a similar tenor issued on July 13, representing a bid price of €100.3034 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 bills maturing on March 22, 2018.