The T-bill rates have fallen marginally while AWPR has fallen by around 1%. The last few T-bill auctions give mixed signals on raising the target funds while CBSL prints 66Bn additional. Inflation fell by 6.6% from the end of 2022. It witnessed that it is too early for CBSL to enter into a loosening monetary policy stance.
The gap between the 364Days T-bill rate and Inflation too has narrowed from 28% to 23% at end of Feb 2023. Yet there is no sufficient evidence of slowing down the government borrowings despite government revenue improvement. Hence borrowing pressure generated by the government is yet to be witnessed.
Credit to the private sector from banks continues to fall, which will results improvement in LKR liquidity in the money market. This may help to reduce the T-Bill rates in the primary and secondary markets during the coming weeks.