Govt cuts T-bill rates by 140bps
The government slashed the rate of treasury bills by up to 140 basis points on Wednesday in an auction held days before announcement of the monetary policy, reflecting the State Bank’s approach towards interest rates. On the other hand, commercial banks participated in the auction with a huge amount of Rs2.188 trillion, but the government was able to raise only Rs820 billion. It was twice the target of Rs400bn nonetheless. The financial market was expecting a cut in T-bill rates as the secondary market was showing a downward trend. At the same time, there is a consensus that the central bank would cut the interest rate by a big margin when it unveils its monetary policy on Nov 4.