Director of Research at the Institute of Economic Affairs (IEA), Dr John Kwakye
The Director of Research at the Institute of Economic Affairs (IEA), Dr John Kwakye, has noted that the interest rates on the treasury bills market must tally with other money market rates.
He emphasised that with an inflation rate of 23%, a 17% interest rate on treasury bills is artificially low.
According to him, if steps are not taken, investors may be forced to consider other options.
Reacting to the latest treasury bill auction results released by the Central Bank, he wrote on his X page on March 16, 2025: “T-Bill yield of 17% as reported when inflation is 23%, seems artificially low. It is important that T-Bill rates are aligned with other money market rates to avoid potential flight to dollars.”
The investor demand for Ghana’s short-term government securities has remained resilient in the latest treasury bill auction on March 14, 2025, with bids totalling GH¢9.26 billion.
It has exceeded the government’s GH¢8.26 billion target by 10.7%.
Despite the oversubscription, yields have continued to decline across all maturities.
The government accepted GH¢8.77 billion in bids, surpassing its target by GH¢512 million while rejecting GH¢490 million worth of offers.
The 91-day bill saw the strongest demand, attracting bids of GH¢6.22 billion, all of which were accepted.
The 182-day and 364-day bills recorded bids of GH¢1.83 billion and GH¢1.20 billion, with accepted amounts of GH¢1.80 billion and GH¢746 million, respectively.
Yields on the 91-day and 182-day instruments fell to 15.86% and 16.92%, down 185 and 204 basis points from the previous auction.
The 364-day bill also declined, settling at 18.96%, a 102-basis-point drop.
SSD/EB
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T-Bill yield of 17% as reported when inflation is 23%, seems artificially low. It is important that T-Bill rates are aligned with other money market rates to avoid potential flight to dollars.
— J. K. Kwakye (@JohnKwabenaKwa1) March 17, 2025
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