Ghana's 91-day Treasury bill now pays less than inflation: what it means for investors

Ghana's most popular government security is now delivering negative real returns, as the 91-day Treasury bill yield fell to 4.68 percent at last week's auction, below the 5.0 percent inflation rate recorded in August. With the Bank of Ghana projecting inflation to climb into its medium-term target band over the coming quarters, investors holding short-dated government paper could see their purchasing power erode further.

This marks a dramatic shift from a year ago, when the 91-day bill paid more than 10 percent. The yield has now fallen below the headline inflation rate for the first time in this cycle, leaving investors with a real return of roughly minus 0.3 percentage points.

Why are Treasury bill yields falling while inflation rises?

The Bank of Ghana's aggressive easing cycle has compressed short-term rates even as consumer prices begin to tick up. The 91-day rate averaged above 11 percent in January 2026 but fell below 5 percent by March. Over the same stretch, inflation climbed from a low of 3.2 percent in March to 5.0 percent in August, closing the gap between nominal returns and the cost of living.

Governor Dr Johnson Pandit Asiama confirmed the central bank's outlook at the 132nd Monetary Policy Committee press briefing:

Presently, headline inflation remains below the lower bound of the medium-term target band and is projected to move up into the band over the next few quarters.

The medium-term target band is 8 percent plus or minus 2 percentage points, implying inflation could roughly double from current levels. That would push real losses on the 91-day bill significantly deeper unless yields recover.

All Treasury bill tenors fell at last week's auction

The decline was broad-based across the yield curve. The 91-day rate eased from 4.69 percent the previous week. The 182-day bill fell to 6.37 percent from 6.48 percent, and the 364-day bill dropped to 9.83 percent from 9.98 percent.

Despite the falling returns, investor demand remains strong. At the September 25 auction, bids totaled GH¢3.66 billion against a government target of GH¢2.75 billion, an oversubscription of about 33 percent. Government accepted GH¢2.90 billion. The 91-day bill drew the bulk of demand, with GH¢2.08 billion tendered and GH¢1.88 billion accepted.

Demand has been uneven, however. At the previous week's auction on September 18, investors tendered GH¢3.96 billion against a larger target of about GH¢4.12 billion, leaving it undersubscribed. Government sold GH¢2.21 billion. Analysts attributed part of that shortfall to banks favoring Bank of Ghana bills, which offer more competitive returns. Government has set a lower target of GH¢2.24 billion for this week's auction.

What does this mean for ordinary savers?

The pain extends beyond Treasury bill investors. The average interest rate on savings deposits stood at 4.10 percent in August, below the 5.0 percent inflation rate. Money kept in a typical savings account is losing about 0.9 percent of its value each year in real terms.

Demand deposits paid an average of just 1.62 percent. Time deposits still offer positive real returns, with the average three-month rate at 8.68 percent and the six-month rate at 9.72 percent, although both have fallen from 10.50 percent in June.

For investors seeking protection, longer-dated securities provide more cushion. The 364-day bill's 9.83 percent yield sits almost 5 percentage points above inflation. Yields on post-restructuring government bonds on the secondary market ranged from about 10.9 percent to 15.7 percent in August.

What is driving the recent rise in inflation?

The central bank attributes the recent uptick mainly to utility costs and fuel prices. Non-food inflation rose to 6.8 percent in August from 6.1 percent in July, driven by pass-through effects from upward adjustments in utility tariffs and elevated crude oil prices. Food inflation eased marginally to 3.0 percent from 3.1 percent.

There is an important nuance in the August data. Consumer prices actually fell by 1.0 percent between July and August, as food prices dropped by 2.6 percent in the month. The rise in the annual rate partly reflects the sharper monthly fall in prices a year earlier, in August 2025, rather than a fresh surge alone.

Dr Asiama stressed that underlying pressures remain contained. The BoG's core inflation measure, which excludes energy and utility prices, eased to 4.2 percent in August from 4.3 percent in July. Survey-based inflation expectations among consumers, businesses and the banking sector also declined.

Despite this, all the inflation expectations and core inflation measures eased, indicating a moderation in underlying inflation,

he said.

What risks could push inflation higher?

The MPC identified several upside risks: further upward revisions to utility tariffs, rising ex-pump petroleum prices and their linkage to transport fares, a stronger US dollar following the US interest rate hike, and possible spillovers from global supply chain constraints. On the downside, continued fiscal consolidation, improved food supply and exchange rate stability could help contain prices.

What should investors watch next?

The direction of Treasury bill yields will be decisive for both investors and government. If inflation rises as projected while short-term yields keep falling, real losses on government paper will widen. At some point, investors may demand higher returns to keep lending to government, raising its borrowing costs just as it has begun to benefit from cheaper domestic financing.

The gap between short and long rates is likely to push investors further along the yield curve in search of real returns. The 91-day bill now trades far below the BoG's policy rate of 14.0 percent and below the interbank rate of 10.20 percent, leaving little room for further compression without deepening losses for holders.

Frequently asked questions about Ghana's Treasury bill yields

Is the 91-day Treasury bill still a good investment?

With a yield of 4.68 percent against 5.0 percent inflation, the 91-day bill currently delivers a negative real return. Investors seeking positive real returns may find better value in longer-dated instruments like the 364-day bill at 9.83 percent or time deposits averaging 8.68 percent for three months.

Why are investors still buying Treasury bills with negative real returns?

Demand remains strong due to safety, liquidity and regulatory requirements. Banks and money market funds must hold government securities for prudential reasons, and the 91-day bill remains the most liquid instrument in the market. At last week's auction, bids totaled GH¢3.66 billion against a GH¢2.75 billion target.

When will inflation return to the Bank of Ghana's target band?

The BoG projects inflation to move into its medium-term target band of 8 percent plus or minus 2 percentage points over the next few quarters. Governor Asiama noted that underlying inflation measures and expectations have eased, suggesting the rise may be gradual rather than abrupt.