Dip in T-bill yields raises hopes for SBP rate cut

The government on Wednesday slashed the cut-off yields on treasury bills and raised less than the auction target even lower than the maturing debt. The State Bank of Pakistan (SBP) reported that the returns on T-bills have been reduced by up to 50 basis points indicating the future interest rate trend. It was also observed that unlike the previous trend, the highest bids were received for 12-month papers that too suggesting a possible cut in the SBP policy rate in the next monetary policy review. The government received total bids of Rs4 trillion with more than half for 12-month tenor. Earlier, the investors, mainly banks, have been investing in the three-month papers. At the last review, the State Bank maintained a tight monetary policy stance by leaving the key interest rate unchanged at 22pc.