WASHINGTON (AP) — Interest rates on six-month Treasury bills have fallen to the lowest level this year, but economists are more worried about recent rise in long-term rates because it could threaten a rebound in the housing market.

The Treasury Department yesterday auctioned $30 billion in six-month bills at a discount rate of 0.290 percent, down from 0.345 percent last week. Another $31 billion in three-month bills was auctioned at a discount rate of 0.160 percent, down from 0.190 percent last week.

The six-month rate was the lowest since they sold for 0.250 percent on December 29, 2008. The three-month rate was the lowest since the bills sold for 0.150 percent on June 1.

Rates on the three- and six-month bills have been moving in a narrow band below one percent for many months. Analysts expect they will stay at low levels until the economy shows greater signs of recovering and the Federal Reserve starts raising interest rates to guard against inflation.

The Fed in December cut its target for the federal funds rate, a key short-term rate which influences three- and six-month Treasury rates, to a record low of between 0.25 percent and zero.

Fed officials will meet again on June 23-24, and economists believe they will maintain a low funds rate to provide more support for a recovery expected in the second half of this year. The funds rate directly influences banks' prime lending rate, the benchmark for millions of short-term business and consumer loans such as home equity lines of credit. The prime rate has been at 3.25 percent since December, the lowest level in more than a half-century.