On July 26, 2018, 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 at least through the summer of 2019 and in any case for as long as necessary to ensure the continued sustained convergence of inflation to levels that are below, but close to, two per cent over the medium term.

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. 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 and that net purchases will then end.

The Governing Council intends to reinvest 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 July 23, the ECB announced its weekly MRO. The operation was conducted on July 24 and attracted bids from euro area eligible counterparties of €1.95 billion, €0.01 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 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 €0.80 billion from euro area eligible counterparties. The amount was allotted in full in accordance with current ECB policy.

Also on July 25, the ECB conducted an eight-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 2.41 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 26, maturing on October 25. Bids of €44 million were submitted, with the Treasury accepting €28 million. Since €22 million worth of bills matured during the week, the outstanding balance of Treasury bills increased by €6 million, to stand at €371 million.

The yield from the 91-day bill auction was -0.353 per cent, up by 0.2 basis point from bids with a similar tenor issued on July 19, representing a bid price of €100.0893 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 30 and November 1, respectively. 

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