ECB decisions
On Thursday, 22 January, 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 0.05%, 0.30% and -0.20% respectively.
Also on Thursday, 22 January, the Governing Council of the ECB decided that the interest rate on the remaining six targeted longer-term refinancing operations (TLTRO) would be equal to the rate on the Eurosystem's MROs prevailing at the time when each TLTRO is conducted. As a result of this decision, the 10 basis point spread over the MRO rate which had been applied to the first two TLTROs has been eliminated for the forthcoming TLTROs to be conducted between March 2015 and June 2016.
Furthermore, on Thursday, 22 January, the Governing Council of the ECB announced an expanded asset purchase programme to fulfil the ECB's price stability mandate. The programme will now see the ECB add the purchase of sovereign bonds to its existing private sector asset purchase programmes to address the risks of a too prolonged period of low inflation. It will also encompass the asset-backed securities purchase programme and the covered bond purchase programme, which were both launched late last year. Combined monthly purchases will amount to €60bn, which are planned to be carried out until at least September 2016 and in any case until the Governing Council sees a sustained adjustment in the path of inflation that is consistent with its aim of achieving inflation rates below, but close to, 2% over the medium term.
ECB Monetary Operations
On Monday, 19 January, the ECB announced its weekly MRO. The auction was conducted on Tuesday, 20 January and attracted bids from euro area eligible counterparties of €125.26bn, €11.27bn 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 0.05%, in accordance with current ECB policy.
On Wednesday, 21 January, 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 rate of 0.63% 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 28- and 91-day bills maturing on 20 February and 24 April, respectively. Bids of €7m were submitted for the 28-day bills, with the Treasury accepting €2.10m, while bids of €41m were submitted for the 91-day bills, with the Treasury accepting €13m. Since €2m worth of bills matured during the week, the outstanding balance of Treasury bills increased by €13.10m, to stand at €198.54m.
The yield from the 28-day bill auction was 0.020%, i.e. 0.5 basis point higher than on bills with a similar tenor issued on 9 January, representing a bid price of 99.9984 per 100 nominal. The yield from the 91-day bill auction was 0.023%, i.e. 0.2 basis point lower than on bills with a similar tenor issued on 16 January, representing a bid price of 99.9942 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 28- and 90-day bills maturing on 27 February and 30 April, respectively.