Karachi: The cut-off yields of Market Treasury Bills (T-bills) were slashed substantially, witnessed in the recent auctions held on October 5, 2011. According to Alfalah Securities, the auction held on Wednesday showed great participation from the banking sector as the bids had reached to PKR 436 bn against the State Bank target of PKR 177bn. 12-month T-bills have achieved the highest investment of worth PKR 109 bn and its cut-off yield declined by 48bps from 13.31% to 12.83%, which gives an indication of an interest rate reduction in the upcoming monetary policy. While, the bids received for 6-months T-bills stood at PKR 64 bn and its cut-off yield declined by 46bps to 12.77%. Furthermore, the cut off-yield for 3-months T-bills was cut by 32 bps to 12.74% through which PKR 4 bn were raised. A decline in T -bills rates was witnessed on account of a reduction in inflation in 1QFY12 mainly due to a base year change which also gives room to the Central Bank to reduce the policy rate by 100 bps.