The government raised Rs326 billion through Treasury bills (T-bills) as yields declined by up to 41 basis points amid expectations of a 100-basis-point rate cut in the upcoming State Bank of Pakistan (SBP) policy review on January 27.Â
The auction, with a target of Rs350 billion, saw participation of Rs1.4 trillion compared to the maturity of Rs515 billion. Following the auction, three-month T-bill yields dropped to 11.58%, six-month yields to 11.4%, and 12-month yields to 11.38%.
Of the total bids, the government secured Rs220.3 billion through competitive bidding and Rs105.2 billion through non-competitive means, totaling Rs325.5 billion.Â
In terms of tenure, it raised Rs3.3 billion through three-month papers, Rs5 billion through six-month papers, and Rs212 billion through 12-month papers.Â
The funds raised fell short of the maturity amount, as the government managed to generate Rs325.5 billion against an auction target of Rs350 billion.
Market analysts widely expect the SBP to reduce interest rates by 100 bps, citing falling inflation. According to a brokerage report, the consumer price index (CPI) for January is projected to drop to 2.8%, the lowest level since November 2015, largely due to a high base effect despite a 0.6% month-on-month increase.Â
Last month, the SBP reduced the policy rate by 200bps to 13%, marking the fifth consecutive rate cut since June 2024 and bringing total rate reductions for 2024 to 900bps. Analysts anticipate the easing cycle to continue beyond January.
