KARACHI, Dec 12: The cut-off yields on treasury bills were reduced on Wednesday but the cut was not enough to allow speculation regarding next possible cut in the SBP policy rate (discount rate) on Friday.

Rate of return on T-bills are directly linked with the discount rate and fluctuates with the change in the policy interest rate.

The auction recorded 5 basis points cut in the three and 6-month T-bills to sell the papers at 9.27 per cent and 9.29 per cent respectively.

The 12-month paper noted a cut of only 2 basis points to sell it at rate of 9.36 per cent.

The government raised a total amount of Rs66 billion. The highest amount of over Rs52 billion from benchmark 6-month papers and the rest from three- and 12-month T-bills.

The declining inflation has strengthened markets’ view about a low interest rate scenario but many factors indicate the mounting pressure on financial affairs.

Some analysts believe any big cut in the interest rate could have negative consequences in the long run.