Treasury bill rates up
INTEREST rates on treasury bills went up as the Bank of Uganda (BOU) attempts to tighten liquidity, to check rising inflation, presently at 5.8%.
By Steven Odeu
INTEREST rates on treasury bills went up as the Bank of Uganda (BOU) attempts to tighten liquidity, to check rising inflation, presently at 5.8%. This is above the 5% target set by the finance minister for this financial year.
“We have had a general increase on all the maturities of treasury bills, but this should not be surprising, because inflation is also rising. The Central Bank has to tighten its policy rates to avoid an escalation of inflation,†Benon Mutambi, BOU senior principal economist said yesterdday.
However Mutambi was confident the target of 5% will not be overlapped in the next eleven months.
In the latest BOU economic and financial indicators report, interest rates on treasury bills continued to increase and by end of December last year, the average discount rates stood at 11.36%, 15.76%, 16.44% and 16.43% for the 91-day, 182, 273 and 364 day bills respectively.
The increase in T-bill rates also sends the business community worrying signals, as they anticipate a further rise in commercial bank prime lending rates. This is the rate at which banks lend money to their best borrowers.
INTEREST rates on treasury bills went up as the Bank of Uganda (BOU) attempts to tighten liquidity, to check rising inflation, presently at 5.8%. This is above the 5% target set by the finance minister for this financial year.
“We have had a general increase on all the maturities of treasury bills, but this should not be surprising, because inflation is also rising. The Central Bank has to tighten its policy rates to avoid an escalation of inflation,†Benon Mutambi, BOU senior principal economist said yesterdday.
However Mutambi was confident the target of 5% will not be overlapped in the next eleven months.
In the latest BOU economic and financial indicators report, interest rates on treasury bills continued to increase and by end of December last year, the average discount rates stood at 11.36%, 15.76%, 16.44% and 16.43% for the 91-day, 182, 273 and 364 day bills respectively.
The increase in T-bill rates also sends the business community worrying signals, as they anticipate a further rise in commercial bank prime lending rates. This is the rate at which banks lend money to their best borrowers.