RATE RISES ANEW. The average rate of the central bank's 28-day securities inched up on Friday (Sept. 16, 2022), a reversal from the decline in the previous week. Bangko Sentral ng Pilipinas (BSP) Deputy Governor Francisco Dakila Jr. attributed this result to market participants' anticipations for another hike in the central bank's key rates during the policy-making Monetary Board (MB) rate setting meeting on Sept. 22. (Photo courtesy of BSP)
MANILA – Uptick in the rate of the Bangko Sentral ng Pilipinas’ (BSP) 28-day securities resumed on Friday, and demand continued to remain strong, from the decline in the previous week.
Data released by the central bank showed the average rate of the 28-day bill rose to 4.2224 percent from 4.0518 percent during the auction last Sept. 9.
The BSP hiked the offer volume to PHP110 billion from PHP90 billion in the previous week.
Total tenders reached PHP154.38 billion. The auction committee made a full award.
In a statement, BSP Deputy Governor Francisco Dakila Jr. said accepted yields in this week’s 28-day securities auction “shifted higher and widened to a range of 4.0000-4.3000 percent.”
“The sustained strong demand for the longer-tenor BSP bill show that market participants are already pricing in their expectations of higher interest rates ahead of the BSP’s policy meeting next week,” he said.
BSP’s policy-making Monetary Board (MB) will have its sixth rate-setting meeting for the year on Sept. 22 and it is widely expected to announce another rate hike as inflation remains elevated both here and in the United States.
Markets expect the Board to sustain its rate hike moves given the expectations for similar path for the Federal Reserve funds rate.
The increases in the BSP’s key rates are expected to help address the elevated inflation rate and the interest rate differential with the US.
Dakila said results for this week’s securities auction “also show that liquidity in the financial system remains ample.”
“Going forward, the BSP’s monetary operations will continue to be guided by its assessment of the latest liquidity conditions and market developments,” he added. (PNA)
