WASHINGTON | Interest rates on short-term Treasury bills fell in Monday's auction with three-month bills dropping to the lowest level on record.

The Treasury Department auctioned $27 billion in three-month bills at a discount rate of 0.355 percent, down from 0.530 percent last week. Another $27 billion in six-month bills was auctioned at a discount rate of 0.990 percent, down from 1.100 percent last week.

The three-month rate was the lowest on record while the six-month rate was the lowest since these bills averaged 0.975 percent on March 8, 2004.

The discount rates reflect that the bills sell for less than face value. For a $10,000 bill, the three-month price was $9,991.03 while a six-month bill sold for $9,949.95. That would equal an annualized rate of 0.360 percent for the three-month bills and 1.009 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, fell to 1.24 percent last week from 1.44 percent the previous week.