Treasury yields are expected to tumble further due to the positive inflation outlook in the medium term.

Inflation took a nose dived in April 2024 to 25.00% from 25.80% in March 2024. The decline in the headline rate was occasioned by a 280-basis decrease in food inflation to 26.80%, while non-food inflation also fell by 90 basis points to 23.5%.

However, the month-on-month inflation for April 2024 stood at 1.80%, above the 0.80% recorded in March 2024.

“Our view hinges on a broadly favourable outlook with a decent risk premium spread, comparing the April 2024 annual inflation rate and prevailing T-bills yields”, Databank Research said.

Policy rate cut to remain same

Analysts however believe the inflation trend so far in 2024 may dent prospects of a policy rate cut in May 2024.

Treasury bills were oversubscribed in last week’s money market auction, as total bids exceeded the treasury’s target.

The government accepted all bids totalling GH¢4.92 billion, above the auction target by 33.83% and matured bills by 42.36%.

The 91-day yield decreased by 25 basis points to 25.20%, while the 182-day bill contracted 40 basis points to 27.00%.

The yield on the 364-day bill was unchanged at 28.00%.