Treasury bills’ interest rates drop to 2.18%

Treasury bills’ interest rates saw a decline once again during this week’s auction, as evidenced by the high demand of investors for these instruments.

At Tuesday’s auction, 12-month maturities were issued at a weighted average interest rate of 2.18%.

Interest rates declined for the eighth auction in a row and since the beginning of the year they have fallen by about 0.6 percentage points.

The decline in interest rates is understandable by looking at the ratio between demand and supply in the primary market of government debt securities.

At Tuesday’s auction, demand amounted to ALL 10.7 billion, while the amount announced for government funding was ALL 8.7 billion.

The market and mainly banks have abundant liquidity, also because private sector lending in the first months of the year is running at sluggish rates.

Reducing treasury bills’ interest rates helps in transmitting the stimulating monetary policy to the economy.

Long-term lending in Lek is mainly based on the performance of interest rates, on which fixed margins are applied.

Consequently, the low interest rates on government securities favor free lending in local currency, facilitating the growth of new consumption and investments in the economy.

SCAN

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