MANILA -- The rates of Philippine Treasury bills (T-bills) rose across-the-board Monday as market players anticipate another increase in the Bangko Sentral ng Pilipinas’ (BSP) key rates later this month.
Average rate of the 91-day paper went up 32.4 basis points to 3.549 percent from 3.225 percent during the auction last September 3.
The Bureau of the Treasury (BTr) offered this tenor for PHP4 billion but made a partial award amounting to PHP2.47 billion after banks asked for high yields. Total tenders reached PHP5.78 billion.
Rate of the 182-day T-bill increased by 25.2 basis points to 4.353 from last week’s 4.101 percent.
Banks submitted PHP8.075-billion worth of bids and the auction committee made a full award of PHP5 billion.
The 364-day paper fetched an average rate of 5.137 percent, higher by 23.8 basis points than its 4.899 percent average rate in last week’s auction.
It was offered for PHP6 billion and awarded in full. Total bids amounted to PHP8.051 billion.
National Treasurer Rosalia De Leon told reporters after the auction that the upticks in rates are as expected following the continued rise of inflation rate in the domestic market.
Last August, inflation went up to 6.4 percent from month-ago’s 5.7 percent due to faster rate of increases of the food and non-alcoholic beverages index, among others.
The cause of price increases of basic commodities was traced to supply-side factors, thus, the establishment by authorities of an eight-point measure to ensure sufficient supply of rice and meat, among others, in the near term.
Another reason for the surge in inflation are higher local pump prices as a result of the spike in world crude prices.
With the big jump of inflation rate, most analysts forecast a 50 basis points hike in the BSP’s policy rates during the rate setting meet of the policy-making Monetary Board (MB) on September 27, 2018.
Rate hike expectations are driving the increase in interest rates, De Leon said.
“Analysts would also want to see BSP anchor inflationary expectations,” she said, noting that the expectations are not for simple rate hike but an “aggressive policy action.”
Monetary officials expect inflation to peak in the third quarter this year and go back to within-target levels of two to four percent next year since the factor driving it ison the supply side.
They, however, assured the public that the central bank is continuously monitoring developments and are ready to take proper action to anchor expectations and ensure sustained rise of the domestic economy.
To date, the BSP’s key rates has risen by 100 basis points. (PNA)
