9 0 0 2 weeks ago 4 min to read

Before the BSP policy rate meeting, TDF rates increased.

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The two-week tenor of the Bangko Sentral ng Pilipinas (BSP) term deposit facility (TDF) was posted under subscription on Wednesday, a trend attributed to the expectation of further increases in the central bank’s benchmark rates.

During the auction on March 1 of last year, the seven-day TDF’s average rate marginally increased from 6.4687 percent to 6.5070 percent.

The 14-day facility’s rate increased from 6.4932 percent last week to 6.5387 percent this week.

BSP Vice Governor Francisco Dakila Jr. said in a statement that while the accepted range for the two-week TDF “moved upward and extended to 6.3950-6.7490 percent,” it had shrunk for the seven-day facility in this week’s auction to 6.4375-6.6000 percent.

From PHP160 billion last week, the BSP increased the offering for the one-week facility to PHP200 billion. Once bids reached PHP223.392 billion, it was totally awarded.

Nonetheless, it maintained the PHP140 billion offer volume for the 14-day facility despite the fact that only PHP132.761 billion in tenders were received, which the auction committee completely awarded.

The February 2023 inflation statistics, which remained high, and the TDF auction results “came after the release of the TDF auction, which further enhanced the possibility of a prolonged hawkish monetary policy stance from the BSP,” Dakila added.

The Philippine Statistical Authority announced on Tuesday that the rate of price increases slowed from the month before’s rate of 8.7 percent, which was the fastest in the previous 14 years, to 8.6 percent in February of this year.

After raising its key policy rate by 450 basis points since May 2022 to help combat the high inflation rate, the BSP reaffirmed its willingness to do so.

The BSP’s monetary operations would continue to be directed by its evaluation of the most recent market developments and liquidity conditions, according to Dakila.

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