Money Market Report for the week ending April 28, 2017
ECB Decisions
On April 27, 2017, 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 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 Governing Council confirms that the net asset purchases, at the new monthly pace of €60 billion, are intended to run until the end of December 2017, 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. The net purchases will be made alongside reinvestments of the principal payments from maturing securities purchased under the asset purchase programme. 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 programme in terms of size and/or duration.
ECB Monetary Operations
On April 24, 2017, the ECB announced its weekly MRO. The operation was conducted on April 25, 2017, and attracted bids from euro area eligible counterparties of €14.41 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 0.00%, in accordance with current ECB policy.
On April 26, 2017, 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 €1.47 billion from euro area eligible counterparties. The amount was allotted in full in accordance with current ECB policy.
Also on April 26, 2017, 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 1.37%.
Domestic Treasury Bill Market
In the domestic primary market for Treasury bills, the Treasury invited tenders for 91-day and 182day bills for settlement value April 27, 2017, maturing on July 27, and October 26, 2017, respectively. Bids of €35.00 million were submitted for the 91-day bills, with the Treasury accepting €10.00 million, while bids of €30.00 million were submitted for the 182-day bills, with the Treasury accepting €2.00 million. Since €20.00 million worth of bills matured during the week, the outstanding balance of Treasury bills decreased by €8.00 million, to stand at €219.00 million.
The yield from the 91-day bill auction was -0.309%, up by 4.1 basis points from bids with a similar tenor issued on April 20, 2017, representing a bid price of €100.0782 per €100 nominal. The yield from the 182-day bill auction was -0.250%, also up by 4 basis points from bids with a similar tenor issued on April 6, 2017, representing a bid price of €100.1265 per €100 nominal.
During the week under review, there was no trading on the Malta Stock Exchange.
On Tuesday the Treasury invited tenders for 91-day bills maturing on August 3, 2017.