Govt raises Rs1.06tr from T-bill auction as yields show mixed trend

The government raised Rs1.057 trillion from the auction of market Treasury bills on Wednesday, with yields showing a mixed pattern after the State Bank of Pakistan (SBP) kept its policy rate unchanged at 11%.

According to the SBP’s auction results, the government had set a target of Rs950 billion, against a maturity amount of Rs1.104 trillion. The total participation reached Rs2.132 trillion, while the face value of accepted bids stood at Rs1.134 trillion.

Yields on short-term papers moved in different directions. The one-month T-bill yield dropped by 11 basis points to 11.0003%, while the three-month and six-month yields remained flat at 11.0489% and 11.0448%, respectively. The 12-month yield, however, increased by 10 basis points to 11.3498%.

The SBP, in its latest monetary policy announcement on Monday, maintained the key rate at 11% for the fourth consecutive meeting, citing an improving growth outlook and a smaller-than-expected economic impact from recent floods. The central bank revised its GDP growth projection for FY2026 to the upper half of the earlier 3.25%–4.25% range.

Inflation, however, accelerated to 5.6% in September from 3% in August, driven by higher food and energy prices as well as core inflation pressures. The SBP also noted that trade disruptions at the Pakistan-Afghanistan border could add to inflationary pressures in the coming months.

The Monetary Policy Committee (MPC) said the latest increase in food prices was milder than previous flood-related spikes, and inflation expectations among consumers and businesses had eased. Still, it expects inflation to stay above the target range for a few months in the second half of FY2026 before stabilising within range in FY2027.

The MPC cautioned that the inflation outlook remains vulnerable to global commodity price volatility, future energy price adjustments, and uncertainties in wheat and perishable food markets.