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TDF rates have risen again, indicating that central bank rate hikes are on the way.

MANILA, Philippines — On Wednesday, the term deposit facility’s (TDF) interest rates rose again, owing to expectations of more hikes in central banks’ benchmark rates.

The average rate of the seven-day TDF, which is one of the central bank’s excess liquidity mopping instruments, rose to 2.4163 percent, according to data issued by the Bangko Sentral ng Pilipinas (BSP). The 14-day TDF rose to 2.5178 percent.

During the auction on June 8, these were 2.3249 percent and 2.3991 percent for the seven-day and 14-day tenors, respectively.

The BSP kept the one-week TDF offer volume at PHP140 billion and the two-week TDF offer level at PHP160 billion. Both were properly compensated.

The one-week facility received a total of PHP140 billion in tenders. The bid coverage ratio was 1.3463.

The two-week facility drew a total of PHP176.18 billion in bids. 1.1011 was the bid coverage ratio.

The volume of bids submitted during the TDF auction this week is “slightly higher than the BSP’s expected volume range,” according to BSP Deputy Governor Francisco Dakila Jr. in a statement.

“The auction results continued to reflect market participants’ expectations of higher policy rates.” Nonetheless, market conditions remain normal, owing to the financial system’s continued adequate liquidity,” he remarked.

“Monetary operations will continue to be guided by the central bank’s assessment of the latest liquidity conditions and market developments,” he said.

Due to the sustained acceleration of inflation rates, the BSP and the Federal Reserve are expected to announce another round of rises in their respective key policy rates this month.

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