FRANKFURT (MNI) – The European Central Bank on Tuesday fell short
for the third time in its weekly operation to sterilize purchases of
Eurozone bonds, removing only E68.22 billion from the financial system ,
data released by the bank showed.
Expectations had been for the ECB to drain E75.6 billion, matching
the total volume of government bonds purchased by the ECB and settled as
of last Friday, which had remained unchanged as the central bank had
abstained from any bond purchases in the week ending January 28.
The previous two times when the central bank had been unable to
drain the target amount were in late December and June, when banks had
hoarded cash ahead of the expiry of the ECB’s first one-year refi
operation.
All 53 bids were satisfied at Tuesday’s draining operation, the ECB
said.
The weighted average allotment rate for today’s operation was
0.85%, the lowest rate was 0.7%, and the highest rate accepted, or the
marginal rate, was 1.0%, the ECB reported.
The drained liquidity takes the form of fixed-term deposits. These
can be used as collateral in the Eurosystem’s refinancing operations.
The central bank will hold another liquidity-absorbing operation next
week to reabsorb this week’s term deposits when they expire, as well as
any additional amounts that might be injected into the financial system
in the event of new bond purchases.
— Frankfurt bureau; +49-69-720142; frankfurt@marketnews.com
[TOPICS: MGX$$$,M$$FX$,M$X$$$,M$$EC$]
