KARACHI, June 26: The State Bank on Wednesday left the cut-off yield on six-month treasury bills unchanged at 6.43 per cent while conducting the last auction of the bills in the current fiscal year. Bankers say the move put to rest the rumour that the central bank may lower the cut-off as a first step toward further easing the monetary policy.

The central bank said it sold Rs10.85 billion worth of bills at a weighted average yield of 6.28 per cent to suck in Rs10.52 billion from the system. This weighted average yield is down 13 basis points from the previous 6.41 per cent. But bankers say it is the cut-off yield that shows any change in the SBP monetary policy adding that the decline in weighted average yield has to do with the bid pattern for the bills.

The State Bank had received Rs27.5 billion worth of bids for six-month and one-year bills of which it accepted Rs10.85 billion bids for the six-month bills and rejected the rest.

Senior bankers said they still hoped that the central bank may ease off its monetary policy with the start of the next fiscal year in July. “There is a general feeling that further cut in the discount rate is due...most people believe that the cut would be announced some time in July,” said treasurer of a leading foreign bank.

Bankers started waiting for a rate cut after Finance Minister Shaukat Aziz said in his budget speech earlier this month that steps would be taken to persuade banks to lower their interest rates. Currently the SBP discount rate is 9 per cent.