Rate for 6-month Treasury bills drop to record low 0.24%

Interest rates on six-month Treasury bills fell Monday to the lowest point on records that go back more than 50 years. The Treasury Department on Monday auctioned $29 billion in six-month bills at a discount rate of 0.240 percent. That's down from 0.255 percent last week, and an all-time low since the government started issuing the bills weekly in December 1958. Another $30 billion in three-month bills were auctioned at a discount rate of 0.150 percent, down from 0.165 percent last week. That rate was the lowest since 0.135 percent on April 30. Rates on three- and six-month bills have been moving in a narrow band below 1 percent for months, reflecting a drive by the Federal Reserve to push short-term borrowing costs down in an effort to jump-start economic activity and get the country out of the longest recession since World War II. The Fed in December slashed its target for the federal funds rate, the interest that banks charge each other on overnight loans, to a record low near zero where it remains. At its last meeting on Aug. 12, the Fed repeated the view that it expected rates to remain low for an extended period. Many private economists don't expect the Fed to start raising rates for at least the next 12 months. They believe that the central bank will not start to tighten credit conditions until the unemployment rate starts falling, something unlikely to occur until next summer. The discount rates reflect that the bills sell for less than face value. For a $10,000 bill, the three-month price was $9,996.21, while a six-month bill sold for $9,987.87. That would equal an annualized rate of 0.152 percent for the three-month bills, and 0.244 percent for the six-month bills. Separately, the Federal Reserve said Monday that the average yield for one-year Treasury bills, a popular index for making changes in adjustable rate mortgages, edged up to 0.45 percent last week from 0.44 percent the previous week.