RATE UPTICK. Rates of the Bangko Sentral ng Pilipinas' (BSP) term deposit facility increased again on Wednesday (Nov. 9, 2022), which BSP Deputy Governor Francisco Dakila Jr. traced to expectations for another hike in the central bank's key rates. Both tenors were also undersubscribed. (Photo courtesy of BSP)
MANILA – Expectations for another jump in the Bangko Sentral ng Pilipinas’ (BSP) key rates this month resulted in another uptick in the central bank’s term deposit facility (TDF) rates.
The average rate of the seven-day facility rose to 5.0668 percent from 4.9569 percent during the auction last Nov. 2.
The rate of the 14-day TDF also increased to 5.2799 percent from 5.0567 percent previously.
Volume offering for the seven-day facility was hiked to PHP240 billion from last week’s PHP220 billion.
Total tenders reached PHP203.107 billion but the auction committee only awarded PHP202.857 billion.
The BSP lowered the offer volume for the two week facility to PHP140 billion from last week’s PHP160 billion.
Tenders amounted to only PHP134.133 billion, which the auction committee fully awarded.
In a statement, BSP Deputy Governor Francisco Dakila Jr. said total tenders submitted in this week’s TDF auction are “at the low end of the BSP’s expected volume range.”
“The results of the TDF auction continue to show ample liquidity in the financial system as eligible market participants price in their expectations of a rate hike from the BSP,” he said.
He added that “looking ahead, the BSP’s monetary operations will remain guided by its assessment of the latest liquidity conditions and market developments.”
The central bank’s policy-making Monetary Board (MB) will have its rate setting meeting on Nov. 17, the second to the last for this year, and it is widely expected to hike the BSP’s key rates anew.
Last week, the Federal Reserve hiked its funds rate by another 75 basis points in a bid to help bring down US’ four-decade high inflation rate to the 2 percent target.
With this, BSP Governor Felipe Medalla, who chairs the seven-man MB, said they will mirror the Fed’s decision during the rate setting meeting this month “to maintain the interest rate differential prevailing before the most recent Fed rate hike, in line with its (BSP) price stability mandate and the need to temper any impact on the country’s exchange rate.” (PNA)
