WASHINGTON (AP) — Short-term Treasury bill rates edged down slightly in Monday's auction and are expected to remain at low levels until the Federal Reserve starts raising interest rates.

That means businesses, money market mutual funds and other investors who use short-term Treasury bills as a convenient and safe place to park their money will not be getting much of a return.

The Treasury Department auctioned $31 billion in three-month bills at a discount rate of 0.185 percent, down from 0.190 percent last week. Another $29 billion in six-month bills was auctioned at a discount rate of 0.295 percent, down from 0.305 percent last week.

The three-month rate was the lowest since three-month bills averaged 0.135 percent on April 27. The six-month rate was the lowest since 0.290 percent on Jan. 12.

The three- and six-month bills have been trading well below 1 percent for most of the year. Economists believe they will remain at low levels for at least another year, until the Fed believes the economy has gained enough traction that it needs to start raising interest rates.

Responding to the severe financial crisis that struck with force last fall, the Fed in December cut its target for the federal funds rate, the interest that banks charge each other on overnight loans, down to a record low of zero to 0.25 percent. The short-end of the Treasury security market is heavily influenced by the federal funds rate.

A Treasury four-week bill at one point in December sold for zero, meaning that an investor could have earned as much by putting the money in a mattress.

The extremely low rates of late last year reflected the panic that set in last fall, when a flight to safety meant worried investors were willing to accept low or in some cases, no rate of return, on super-safe U.S. securities.

Other Treasury rates also dropped, including long-term rates that are more influenced by market forces. Those rates have been rising in recent weeks. The 10-year Treasury is trading above 3 percent after having fallen close to 2 percent last fall, but analysts note that current rate is still extremely low. The 10-year note, which is a key indicator of long-term mortgage rates, was trading above 4 percent a year ago.

Analysts said the small rise in long-term rates is being influenced by the stabilizing economy and the rebound in the stock market, which is making investors more comfortable putting their money somewhere other than government bonds.

With demand lower, the price of the bonds — interest rates — has been rising to attract buyers.

"Up until recently, the flight to safety had attracted a lot of funds to Treasury, lowering yields significantly," said Sung Won Sohn, an economist at the Smith School of Business at California State University.

While rising rates could increase the cost of borrowing for a home loan or small business loan, economists think the Fed will act to prevent that by continuing to purchase massive amounts of Treasury securities until the housing market revives and the economy improves.

Mark Zandi, chief economist at Moody's Economy.com, said the Fed's target of $300 billion in purchases of Treasury securities may be raised to as high as $1 trillion before the economy and the housing market begin to rebound.

Zandi and other economists don't expect the Fed to consider raising the funds rate, which influences short-term borrowing rates, until unemployment peaks probably in the first half of next year. And they also are forecasting that the campaign to purchase Treasuries to dampen any increases in long-term rates will continue for about the same length of time.

For that reason, Zandi expects the rate on 10-year notes will remain around 3 percent this year, even though the government is scheduled to engage in record amounts of borrowing to finance a budget deficit that the Obama administration projects will hit $1.84 trillion this year.

"The Fed is watching mortgage rates and corporate bond yields to make sure they don't rise and jeopardize hopes for a recovery," Zandi said. "That is what matters most to the Fed."

Treasury bills are sold in a method in which the buyer pays less than the face value of the bill but gets the face value when the bill is redeemed. The difference represents the interest that the buyer earns.

In Monday's auction, the three-month price for a $10,000 bill was $9,995.24, while a six-month bill sold for $9,985.09. That would equal an annualized rate of 0.188 percent for the three-month bills, and 0.300 percent for the six-month bills.

Separately, the Fed said Monday that the average yield for one-year Treasury bills, a popular index for making changes in adjustable rate mortgages, fell to 0.52 percent last week from 0.53 percent the previous week.

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