KARACHI, July 20: Yields on Treasury bills remained unchanged at an auction on Wednesday indicating interest rates would hold current levels given a downtrend in inflation, analysts and dealers said.

The cut-off yield on the benchmark six-month Treasury bills stayed at 7.9869pc in the auction and yields on the three- and 12-month bills were also unchanged, the central bank said.

The State Bank has raised rates sharply in recent months to counter inflation. In April, it raised its key discount rate to nine per cent from 7.5 per cent.

Khalid Iqbal Siddiqui, head of research at Investcap Securities, said the central bank would keep close watch on the impact of its recent tightening on inflation before deciding its future plan of action on rates.

The central bank said the weighted average annual yield for the six-month paper fell to 7.9677 per cent, from 7.9761 per cent on July 6. The cut-off yield on the three-month and 12-month T-bills were unchanged at 7.6946 per cent and 8.6959 per cent.

The weighted average annual yield on 3-month paper, however, rose to 7.6946pc from 7.5489pc. Similarly, the average annual yield on 12-month paper also increased to 8.6884 per cent from 8.4561 per cent set on July 6.

The central bank said it sold Rs2.16 billion ($36.23 million) of six-month bills, Rs2.948 billion ($49.45 million) of three-month bills and Rs12.332 billion $207 million) of the 12-month paper.

It received total bids worth Rs42.57 billion, compared with a pre-auction target of Rs10

billion.—Reuters