Ethiopia’s Bills Yield Far Below Bank Rate
Ethiopia sold Birr 22.5485 billion (about US$140 million) of Treasury bills at yields far below the 16% policy rate. Here is what lies behind the gap. The post Ethiopia’s Bills Yield Far Below Bank Rate appeared first on The Rio Times .
Ethiopia recently issued Birr 22.5485 billion (approximately US$140 million) in Treasury bills at yields significantly lower than the National Bank of Ethiopia's 16% benchmark, or policy rate. The 364-day bills paid 6.016%, which is about 10 percentage points below the 16% policy rate. This discrepancy, between the yields of the bills and the policy rate, has been of concern to savers, banks, and the government.
The Ministry of Finance issued the full amount of the bills, which exceeded bids by a factor of 3.1. The 364-day bill's yield of 6.016% sits about 10 percentage points below the 16% policy rate, while the 28-day bill's yield of 1.305% is about 15 points below. The policy rate was raised by the Monetary Policy Committee by one percentage point in July 2026, from 15% to 16%.
Since May, bill yields have plummeted, with the 91-day yield falling from 11% to 2.016%. Excess liquidity in banks, meaning surplus cash, has pushed yields down, as banks bid for these bills. Saver returns on bills are far below the 16% policy rate, with 28-day bills at 1.305% and 91-day bills at 2.016%. The government benefits from borrowing at an average yield of 4.708% on these bills.
The NBE's policy rate may not directly affect bill yields, as further auctions' outcomes remain unknown.
Written by urgent.news from The Rio Times's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
