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TDF rates up ahead of BSP policy rate meeting

By Joann Villanueva

March 8, 2023, 7:45 pm

<p>BSP Deputy Governor Francisco Dakila Jr. <em>(file photo)</em></p>

BSP Deputy Governor Francisco Dakila Jr. (file photo)

MANILA – Bangko Sentral ng Pilipinas’ (BSP) term deposit facility (TDF) rates rose on Wednesday and the two-week tenor posted undersubscription, a development traced to anticipation for further hikes in the central bank’s key rates.

The average rate of the seven-day TDF inched up to 6.5070 percent from 6.4687 percent during the auction last March 1.

The rate of the 14-day facility rose to 6.5387 percent from last week’s 6.4932 percent.

In a statement, BSP Deputy Governor Francisco Dakila Jr. said the accepted range for the seven-day facility in this week’s auction narrowed to 6.4375-6.6000 percent, while that of the two-week TDF “shifted higher and widened to 6.3950-6.7490 percent.”

The BSP hiked the offering for the one-week facility to PHP200 billion from last week’s PHP160 billion. It was fully awarded after bids reached PHP223.392 billion.

It, however, kept the offer volume for the 14-day facility at PHP140 billion but tenders only amounted to PHP132.761 billion, which the auction committee fully awarded.

“The results of the TDF auction came following the release of the February 2023 inflation data, which remained elevated and further raised the possibility of a continued hawkish monetary policy stance from the BSP,” Dakila said.

On Tuesday, the Philippine Statistics Authority reported the slower year-on-year expansion of rate of price increases to 8.6 percent in February this year from month-ago’s 8.7 percent, which is the fastest in the last 14 years.

The BSP reiterated readiness to further increase its key policy rates after increasing it by 450 basis points since May 2022 to help address the elevated inflation rate.

“The BSP’s monetary operations will remain guided by its assessment of the latest liquidity conditions and market developments,” Dakila said. (PNA)

 

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