This is done in order to reduce very large swings in the supply of ES balances that would otherwise occur on days when a large bond line matures. These buy-back operations occur either via our OMOs or bilaterally. They are conducted separately from the purchases at auctions for the purposes of hitting the target for the 3-year AGS yield and to improve market function.
[5] The low level of the cash rate and the high levels of liquidity provided by the Bank have contributed to low rates in other money market instruments, such as bank bills (Graph 5). For some time now, 3month and 6-month bank bills have been trading around market expectations of the future cash rate (i.e. the OIS rate).