YIELDS ON THE central bank’s term deposits ended mixed on Wednesday amid a decline in oil prices and with US Federal Reserve officials saying faster monetary policy normalization could happen on the back of signs of recovery in the world’s largest economy.

Demand for the term deposit facility of the Bangko Sentral ng Pilipinas (BSP) amounted to P614.309 billion on Wednesday, well above the P500-billion offer and also beating the P607.646 billion in bids logged last week.

Broken down, bids for the seven-day deposits reached P258.252 billion, surpassing the P180 billion auctioned off by the central bank and also higher than the P191.315 billion in tenders recorded the previous Wednesday.

Lenders asked for yields ranging from 1.7149% to 1.74%, narrower than the 1.7% to 1.775% band logged a week ago. This caused the average rate of the one-week deposits to decline by 0.45 basis point (bp) to 1.7329% from 1.7374% previously.

Meanwhile, tenders for the 15-day deposits amounted to P356.057 billion, higher than the P320-billion offering but failing to beat the P416.331 billion in bids logged on Nov. 17.

Accepted rates for the tenor were from 1.73% to 1.99%, wider than the 1.74% to 1.8088% range seen a week earlier. With this, the average rate of the two-week papers increased by 1.17 bps to 1.7795% from 1.7678%.

The BSP has not offered 28-day term deposits for more than a year to give way to its weekly auctions of bills with the same tenor.

The central bank uses the TDF and its short-term securities to gather excess liquidity in the financial system and guide market rates.

Term deposit yields ended mixed as Fed officials have become more hawkish in their statements on the pace of the US central bank’s unwinding of asset purchases and rate hikes, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

Fed Vice Chair Richard Clarida said they might assess the possibility of increasing the pace of the reduction in asset purchases at the Fed’s December meeting, Reuters reported Saturday.

Last week, Chicago Fed President Charles Evan said he has become “more open-minded” to start raising interest rates by 2022 if inflation remains elevated.

The recent decline in oil prices as major economies pledged to release reserves to curb the low supply that caused costs to rise also affected sentiment, Mr. Ricafort added.

Reuters reported Wednesday that Brent crude futures inched down 7 cents or 0.1% to $82.24 a barrel by 0432 GMT. Meanwhile, the price of US West Texas Intermediate crude futures increased by 10 cents or 0.1%, to $78.60 a barrel. — L.W.T. Noble with Reuters

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