Hopes for interest rate cut fade away

The cut-off yield for short-term treasury bills has risen by 126 basis points on the back of inflationary pressures as hopes fade away for cut in the State Bank of Pakistan’s policy rate. The auction of treasury bills, held on Wednesday, saw a sudden jump in the three-month T-bills, surprising many even though it was not improbable. On Wednesday, the cut-off yield for three-month T-bills was raised to 21.7 per cent while it increased to 20.44pc in the previous auction on Feb 6. The market was expecting a cut in interest rate, possibly next month when the monetary policy will be announced. However, a continuous inflationary pressure forced policy-makers to counter it with a higher interest rate.