NextGen Day

The term deposit facility (TDF) rates of the Bangko Sentral ng Pilipinas (BSP) increased this month in anticipation of another increase in the key rates of the central bank.

During the auction, last November 2, the seven-day facility’s average rate increased from 4.9569 percent to 5.0668 percent.

Additionally, the 14-day TDF rate rose from 5.0567 percent to 5.2799 percent.

Volume offering for the seven-day facility increased from last week’s PHP220 billion to PHP240 billion.

Although the total amount of bids was PHP203.107 billion, the auction committee only gave out PHP202.857 billion.

From PHP160 billion last week, the BSP reduced the offer volume for the two-week facility to PHP140 billion.

Only PHP134.133 billion worth of bids were received, and the auction committee gave it all.

The overall number of tenders submitted in this week’s TDF auction, according to a statement from BSP Deputy Governor Francisco Dakila Jr., is “in the low end of the BSP’s estimated volume range.”

As eligible market participants price in their expectations of a rate hike from the BSP, he said, “the results of the TDF auction continue to reflect sufficient liquidity in the financial system.”

The BSP’s monetary operations, he continued, “would continue to be informed by its evaluation of the most recent market developments and liquidity conditions.”

On Nov. 17, the second to last meeting of this year, the Monetary Board (MB), which sets policy at the central bank, is expected to raise the BSP’s key rates once again.

In an effort to lower the four decades-high inflation rate in the US to the 2 percent objective, the Federal Reserve raised its fund’s rate by an additional 75 basis points last week.

In line with its (BSP’s) mandate for price stability and the need to limit any impact on the country’s exchange rate, BSP Governor Felipe Medalla, who chairs the seven-man MB, stated that they will mirror the Fed’s decision made during the rate-setting meeting this month to “maintain the interest rate differential prevailing before the most recent Fed rate hike.”

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