The yield on one-year treasury bills (T-bills) continued its downward trajectory, falling to 18.86 percent despite the Monetary Policy Committee (MPC) decision to hold rates.
After a period of elevated yields, driven by high inflation and aggressive monetary policy tightening, the consistent decline observed in recent auctions suggests a more stable and predictable market for government securities.
The one-year bill dropped to 18.86 percent at the auction on Wednesday compared to 29.21 percent at the start of the year.
This decline is despite the Monetary Policy Committee (MPC) of the CBN voting to keep the benchmark policy rate unchanged at 27.5 percent on Tuesday.
“As it stands, inflation seems to be stable and moderating, fixed income yields are falling, yet the MPR is still kept at 27.5 percent, unmoved. Seems the CBN is super worried about inflation,” Kalu Aja, financial expert, said.
Ayodeji Ebo, managing director, Optimus by Afrinvest, also suggested that the MPC might not be confident of current inflation figures.
“Not sure the MPC is convinced of the rebased inflation numbers. Also, they may be trying to ensure the FX stability is sustained,” he said.
In July, Nigeria’s headline inflation dropped for the third consecutive month to 22.22 percent, raising hope for a rate cut soon.
The decision to maintain the policy rate was driven by a combination of persistent domestic inflationary pressures and heightened uncertainty in the global economic environment, both of which continue to pose upside risks to the inflation outlook.
At the auction yesterday, the most significant drop was observed in the 91-day tenor, where the yield moved down to 15.58 percent from the previous 16.32percent.
The 182-day tenor saw its true yield fall to 16.80 percent from the previous 17.64 percent.
For the 365-day bills, the yield decreased to 18.86 percent from 19.94 percent.(BusinessDay)
