Treasury yields are expected to continue declining on the back 190 basis points decrease in headline inflation.
Ghana’s annual inflation rate fell to 23.1% in May 20224 from 25.0%, largely due to a sharp decline of 420 basis points in food inflation to 22.6%.
However, non-food inflation increased marginally by 10 basis points to 23.6% in May 2024 from 23.5% in Apr 2024.
Also, month-on-month quickened 140 basis points to 3.2% in May 2024.
Databank Research said “we expect the 190 basis points drop in the annual rate to broadly improve the inflation risk premium on yields. Thus, coupled with a favourable annual inflation outlook, we expect the decrease in T-bill yields to resume, though high government demand for funds may imply some headwinds to the pace of decline”.
IC Research also said “Given our forecast inflation sharply below 25.0% in May 2024, we opine that real yields remained in positive territory in the month under review”.
Interest rates fall to 24.85%
Interest rates tumbled once again across the yield curve, in line with falling inflation.
The 91-day yield eased to 24.85% from the prior week’s 25.03%.
That of the 182-day also went down by 9.0 basis points to 26.82%.
Similarly, the 182-day bill also declined to 27.81% from the earlier 27.92%.
Meanwhile, the government recorded 1.35% oversubscription of the T-bills sale, far lower than the 19.4% recorded the preceding week.