Government’s short-term borrowing costs fall as inflation drops

Treasury bill rates have been falling steadily as inflation drops. I gathered the following data to show what’s happening.

Inflation 91-day T-bill 182-day T-bill Week
December 15.40% 16.68% 17.94% Dec-17
January 13.30% 15.94% 17.10% Jan-30
February 13.20% 15.94% 16.99% Feb-27
March 12.80% 17.51% 17.19% Mar-27
April 13% 15.44% 16.47% Apr-24
May 12.60% 13.21% 15.02% May-22
June 11.91% 13.29% Jun-16

The good news here is that government’s finances will be helped by the drop in borrowing costs. Also, this drop in T-bill yields will draw investors to alternative investments like stocks which is good for the GSE. Also, businesses should find it cheaper to borrow as lending to government does not look so attractive at the moment and thus investors will look to business for higher returns.

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Jerome Kuseh

Accountant | Economist-in-Training | Private Investor
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