KARACHI, Feb 17: The State Bank on Thursday mopped up Rs41.35 billion from a liquid inter-bank market through repo sale of treasury bills for two weeks at 3.95 per cent.

The central bank sucked in this huge liquidity from the market to keep interest rates from falling. Earlier, on Wednesday it had sold more than Rs62 billion worth of three-month treasury bills and less than Rs100 million one-year T-bills to offset the impact of Rs90 billion worth of inflow in the market through maturity of previously sold bills.

While auctioning the bills on Wednesday, the central bank raised the cut-off yield for one year to 5.48 per cent from 4.98 per cent. It also increased the yield for three months to 4.74 per cent from 4.32 per cent.

The SBP has been tightening interest rates by increasing treasury bills yield to contain growth in private sector credit and keep inflation in check. Inflation rose by 8.76 per cent year-on-year in seven months to January 2005 against the revised full fiscal year target of 7 per cent.