BSP makes full award of short-term securities
THE BANGKO SENTRAL ng Pilipinas (BSP) raised P100 billion as planned through its offer of 28-day bills on Friday as yields dropped slightly after the central bank kept benchmark rates steady at its latest policy meeting.
Demand for the one-month securities reached P120.926 billion, more than the P116.024 billion in tenders logged on May 7.
“The results of the auction continue to support the view that market conditions remain normal amid sustained ample liquidity in the financial system,” BSP Deputy Governor Francisco G. Dakila, Jr. said in a statement.
Accepted rates for the short-term securities ranged from 1.7625% to 1.8%, a tad wider than the 1.77% to 1.8% band a week earlier. This caused the 28-day bills’ average rate to slip by 0.91 basis point to 1.7739% from 1.783% last week.
The BSP uses the short-term bills and its term deposit facility to mop up excess liquidity in the system and guide short-term interest rates.
The lower yields for the short-term bills came following the central bank’s decision to keep borrowing costs unchanged, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a text message.
The BSP held its key interest rate at a record low for a fourth straight meeting on Wednesday, as it continues to support the economy’s recovery from the pandemic.
The Monetary Board maintained the overnight reverse repurchase rate at a historic low of 2%, in line with expectations of 15 out of 17 analysts in a BusinessWorld poll last week. Both the lending and deposit rates were also kept at 2.5% and 1.5%, respectively.
The BSP’s decision to keep rates steady came a day after release of disappointing first-quarter gross domestic product (GDP) data. For the first three months of 2021, GDP shrank by an annual 4.2%, keeping the economy in a recession for a fifth consecutive quarter.
Meanwhile, the central bank lowered its inflation outlook this year to 3.9% from a previous estimate of 4.2%. On the other hand, the forecast for 2022 was raised to 3%, from 2.8% previously. This will put inflation back within the BSP’s 2-4% annual target range. — LWTN
