Market review
During the quarter, the Monetary Policy Committee (MPC) kept the repo rate unchanged at 5.00% at their March 20, 2013 meeting. At 5.9%, inflation is below the upper band of the Reserve Bank's target range. Risks to inflation remain evenly balanced and inflation is expected to remain within the target range. The money market curve steepened during the quarter, with the three-month rate unchanged at 5.125%, while the twelve-month rate increased from 5.466% to 5.662%. Treasury Bills traded above the bank rates and credit spreads on short-term corporate credit decreased during the quarter. The current forward rates suggest that the repo rate will remain unchanged for an extended period.

What SIM did
We invested in all maturities across the money market yield curve during the quarter. Quality corporate credit, which traded above the three-month money market rates, was added to the portfolio. We also included floating rate notes in the portfolio. The combination of corporate credit and floating rate notes will enhance portfolio returns.

SIM strategy
Our preferred investments would be floating rate notes and quality corporate credit to enhance portfolio returns. We expect the repo rate to remain unchanged at the next MPC meeting.