On December 13, 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 net purchases under the asset purchase programme (APP) will end this month. At the same time, the Governing Council is enhancing its forward guidance on reinvestment. Accordingly, the Governing Council intends to continue reinvesting, in full, the principal payments from maturing securities purchased under the APP for an extended period of time past the date when it starts raising the key ECB interest rates, 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 December 10, the ECB announced its weekly main MRO. The operation was conducted on December 11 and attracted bids from euro area eligible counterparties of €7.1 billion, €0.50 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 December 12, 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 $0.07 billion, which was allotted in full at a fixed rate of 2.73 per cent.
During the week under review, participants in the first, second and third operations from the second series of targeted longer-term refinancing operations had the option of terminating or reducing their outstanding amount in these operations before maturity. Accordingly, tomorrow a total of €3.13 billion will be repaid.
Domestic Treasury bill market
In the domestic primary market for Treasury bills, the Treasury invited tenders for 92-day and 183-day bills for settlement value December 12, maturing on March 14, and June 13, 2019, respectively. Bids of €40 million were submitted for the 92-day bills, with the Treasury accepting €33 million, while bids of €18 million were submitted for the 183-day bills, with the Treasury accepting €2.2 million. Since €38 million worth of bills matured during the week, the outstanding balance of Treasury bills decreased by €2.8 million, to stand at €286.3 million.
The yield from the 92-day bill auction was -0.355 per cent, unchanged from bids with a similar tenor issued on December 6, representing a bid price of €100.0908 per €100 nominal. The yield from the 183-day bill auction was -0.356 per cent, a decrease of 0.1 basis point from bids with a similar tenor also issued on December 6, 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 March 21, and June 20, 2019, respectively.