Govt raises Rs2.286tr through treasury bills auction

KARACHI: The government on Wednesday raised Rs2.286 trillion through the auction of Market Treasury Bills (MTBs). The amount raised was higher than the pre-auction target of Rs1.800 trillion. The cut-off yield on a three-month paper remained unchanged at 21.9999 percent. The yield on a six-month paper rose by 3 basis points to 21.9429 percent. The yield on a 12-month paper stood at 21.9997 percent, unchanged from the previous auction.

The yields remained stable in line with market expectations. Analysts believe that interest rates may remain steady in the upcoming months, as inflation is most likely to decline. However, the May inflation number, which is due to be released on Thursday, June 1, 2023, will offer some guidance regarding the trajectory of monetary policy. The Consumer Price Index (CPI) inflation is predicted to reach a record high of 37-38 percent in May due to increasing food and energy prices, and exchange rate depreciation. The CPI inflation rose to a record high of 36.4 percent in April from 35.4 percent in the previous month. The State Bank of Pakistan (SBP) raised the policy rate by 100 basis points to 21 percent in April to combat soaring inflation. The upcoming monetary policy will be announced on June 12.