Treasury bill (T-bill) interest rates have dropped below inflation for the first time in months after the government rejected GHC 10.8 billion out of GHC 18.2 billion in bids in the latest auction. Results from Tender 1944, held on February 28, 2025, show that rates declined across all tenors as the government continued to turn down higher bids in an attempt to lower borrowing costs.

For the 91-day bill, the government received GHC 6.2 billion in bids but accepted GHC 2.38 billion, rejecting GHC 3.82 billion. This brought the interest rate down to 20.79%, a decline from 24.48% in the previous auction. The 182-day bill attracted GHC 3.32 billion in bids, but the government accepted GHC 3.02 billion, rejecting GHC 297 million. The rate for this tenor fell to 22.99% from 25.39% previously. The 364-day bill recorded the highest volume of bids at GHC 8.72 billion, but only GHC 2.02 billion was accepted, with GHC 6.71 billion rejected. This led to the steepest rate drop, with the yield declining from 27.30% to 22.70%​.

The rejection of nearly 60% of total bids, particularly on the 364-day bill, where over 77% of bids were turned down, indicates the government’s stance on reducing rates. The outcome of this auction means that all T-bill rates have now fallen below the inflation rate of 23.5% recorded in January 2025, reversing a long-standing trend of high short-term yields.

The declining interest rates come at a time when inflation has shown signs of slowing, with non-food inflation dropping from 20.3% to 19.2%. However, the impact of these lower rates on investor participation remains to be seen, as real returns on T-bills have now turned negative.

For the next auction (Tender 1945), the government has set a lower target of GHC 5.74 billion, down from GHC 6.49 billion in the previous auction. Whether rates continue to decline will depend on investor response and the government’s willingness to maintain its stance on rejecting expensive bids.