Money Market Report for the week ending 22 July

ECB Decisions

On Thursday, 21 July, the Governing Council of the European Central Bank (ECB) decided that the interest rate on the main refinancing operations (MRO), the marginal lending facility and the deposit facility will remain unchanged at 0.00%, 0.25% and - 0.40% respectively. The Governing Council continues to expect the key ECB interest rates to remain at present or lower levels for an extended period of time and well past the horizon of the net asset purchases.

Regarding non-standard monetary policy measures, the Government Council confirms that the monthly asset purchases of €80bn are intended to run until the end of March 2017, or beyond, if necessary, and in any case until it sees a sustained adjustment in the path of inflation consistent with its inflation aim.

ECB Monetary Operations

On Monday, 18 July, the ECB announced its weekly MRO. The operation was conducted on Tuesday, 19 July and attracted bids from euro area eligible counterparties of €43.57bn, €1.10bn 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 0.00%, in accordance with current ECB policy.

On Wednesday, 20 July, the ECB conducted a seven-day US dollar funding operation through collateralised lending in conjunction with the US Federal Reserve. This operation was carried out at a fixed ratio of 0.90% and did not attract bids from euro area eligible counterparties.

Domestic Treasury Bill Market

In the domestic primary market for Treasury bills, the Treasury invited tenders for 91-day and 182day bills, maturing on 20 October and 19 January 2017. Bids of €45m were submitted for the 91day bills, with the Treasury accepting €15m, while bids of €35m were submitted for the 182-day bills, with the Treasury accepting €2m. Since €27m worth of bills matured during the week, the outstanding balance of Treasury bills decreased by €10m, to stand at €300.25m.

The yield from the 91-day bill auction was -0.300%, down by 0.3 basis point from bids with a similar tenor issued on 14 July, representing a bid price of 100.0759 per 100 nominal. The yield from the 182-day bill auction was -0.297%, also down by 3.7 basis points from bids with a similar tenor issued on 30 June, representing a bid price of 100.1504 per 100 nominal.