Money Market Report for the week ending 15 June

ECB Decisions

On 14 June, the Governing Council of Council the European Central Bank decided that the interest rate on the main refinancing operations 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 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 that the evolution of inflation remains aligned with the current expectations of a sustained adjustment path.

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 €30bn 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 €15bn until the end of December and that net purchases will then end.

The Governing Council intends to maintain its policy of reinvesting 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 11 June, the ECB announced its weekly MRO. The operation was conducted on 12 June and attracted bids from euro area eligible counterparties of €1.14bn, €0.07bn 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 13 June, 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 $0.10bn, which was allotted in full at a fixed rate of 2.42%.

During the week under review, participants in the second, fourth, sixth and eighth operations in the first series of targeted longer-term refinancing operations had the option of terminating or reducing their outstanding amount in these operations before maturity. Accordingly, on 27 June, a total of €3.52bn will be repaid.

Domestic Treasury Bill Market

In the domestic primary market for Treasury bills, the Treasury invited tenders for 91- and 181-day bills for settlement value 14 June, maturing on 13 September and 12 December, respectively. Bids of €30m were submitted for the 91day bills, with the Treasury accepting €20m, while bids of €25m were submitted for the 181-day bills, with the Treasury accepting €3m. Since €20m worth of bills matured during the week, the outstanding balance of Treasury bills increased by €3m, to stand at €320m.

The yield from the 91-day bill auction was -0.356%, down by 0.1 basis point from bids with a similar tenor issued on 6 June, representing a bid price of €100.0901 per €100 nominal. The yield from the 181-day bill auction was - 0.360%, unchanged from bids with a similar tenor issued on 31 May, representing a bid price of €100.1813 per €100 nominal.

During the week under review, there was no trading on the Malta Stock Exchange.

This week the Treasury will invite tenders for 91- and 182-day bills maturing on 20 September and 20 December, respectively.