The central bank recently slashed its Monetary Policy Committee benchmark rate from 29 percent to 27 percent, but the effect of this move on T-bill yields appears muted as government’s heavy domestic financing requirements weigh on the market.

Tight market liquidity is another factor contributing to the stubbornly high yields. Market analysts believe that the elevated demand for domestic financing amid recent price pressure risks, coupled with investors’ ongoing digestion of the central bank’s policy shift, will likely sustain higher yields in the near-term.

Databank, in its latest review of the market noted: “Despite the sharp cut in benchmark rate, we believe that heavy domestic financing needs will keep yields elevated in the coming week”.

However, Databank also highlighted that a potential adjustment in the BoG’s 56-day bill yield could encourage compression of T-bill yields, though this has yet to materialise.

The persistent rise in T-bill yields reflects the broader challenges facing government in its bid to meet weekly auction targets. The latest auction saw yields continue their upward trajectory across various tenors.