Interest rates, as measured by weekly Treasury auctions of 13-week and 26-week bills, plunged sharply yesterday to the lowest levels since mid-July. It was the second decline in four weeks.

The average discount rate on 13-week bills fell to 14.412 percent from 15.611 percent a week earlier. The investment rate, or equivalent coupon-issue yield, was 15.16 percent compared with 16.48 percent for the previous bill auction on Sept. 4. It was the lowest interest rate for three-month bills since July 6.

For 26-week bills, the discount rate was down to 14.657 percent from 15.795 percent. Equivalent coupon-issue yields declined to 16.05 percent from 17.4 percent for these bills, the lowest level since July 13. Treasury sold $4.5 billion each of the 13-week and 26-week bills.

Discount rates understate actual investment returns because some of the price is refunded at the time of purchase. The coupon equivalent yields are based on a 365-day year and thus are higher.

Four weeks ago, the six-month bills had reached a record high average discount rate of 15.854 percent.

As a result of yesterday's drop of more than a percentage point in bill rates, banks and savings institutions may pay -- starting today -- only 14.907 percent on six-month money market certificates, down from 16.045 percent. The interest allowed on these deposits, with minimums of $10,000, is one-quarter point above the six-month bills.

In a separate development, the Treasury set the maximum allowable interest rate on small-saver certificates at 16.55 percent for thrift institutions and 16.30 percent for commercial banks during the two weeks that began yesterday. The previous ceilings were 16 1/2 percent at thrifts and 16 1/4 percent at banks. These certificates have no minimum denominations and mature in 2 1/2 years to four years, with rates tied to Treasury securities.