YIELDS on the Bangko Sentral ng Pilipinas’ (BSP) term deposits went down on Wednesday as the government implements measures to help lower prices after inflation picked up in August.

The central bank’s term deposit facility (TDF) fetched bids amounting to P311.766 billion on Wednesday, above the P260 billion on the auction block as well as P279.725 billion seen a week ago for a P280-billion offer.

Broken down, tenders for the seven-day papers reached P167.276 billion, higher than the P160 billion auctioned off by the central bank but lower than P170.616 billion in bids seen the previous week.

Banks asked for yields ranging from 6.498% to 6.6%, lower than the 6.56% to 6.6% band seen a week ago. This caused the average rate of the one-week deposits to decline by 0.69 basis point (bp) to 6.5833% from 6.6359% previously.

Meanwhile, bids for the 14-day term deposits amounted to P144.49 billion, higher than the P100-billion offering and the P109.109 billion in tenders for a P120-billion offer seen on Aug. 30.

Accepted rates were from 6.5% to 6.605%, slightly narrower than the 6.57% to 6.62% margin recorded a week ago. With this, the average rate for the two-week deposits inched down by 1.12 bps to 6.5872% from the 6.5984% logged in the prior auction.

The BSP has not auctioned off 28-day term deposits for more than two years to give way to its weekly offerings of securities with the same tenor.

The term deposits and the 28-day bills are used by the central bank to mop up excess liquidity in the financial system and to better guide market rates.

TDF yields were lower on Wednesday as the temporary ceiling for rice prices took effect this week, which could help bring down inflation, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

Malacañang last week issued an executive order imposing a nationwide price ceiling of P41 per kilogram for regular milled rice and P45 per kilogram for well-milled rice effective on Tuesday.

TDF yields were also lower “amid proposals to reduce the import tariffs on rice from 35% to help further reduce local rice prices from imported sources,” Mr. Ricafort said.

The National Economic and Development Authority (NEDA) is looking into a “temporary and calibrated” reduction in tariffs for rice to help lower domestic prices, NEDA Secretary Arsenio M. Balisacan said on Tuesday.

Headline inflation accelerated for the first time in seven months in August, amid a spike in the prices of rice, vegetables and fuel, the Philippine Statistics Authority (PSA) said on Tuesday.

Preliminary data from the PSA showed the consumer price index (CPI) quickened to 5.3% in August from 4.7% in July, but slower than the 6.3% clip a year ago.

This was above the 4.9% median estimate in a BusinessWorld poll conducted last week. However, it settled within the Bangko Sentral ng Pilipinas’ (BSP) 4.8-5.6% forecast range for the month.

For the first eight months, the CPI averaged 6.6%, still above the BSP’s 5.6% forecast and 2-4% target for the year.

The BSP has kept benchmark rates steady at its last three meetings as it expects inflation to return to its target path within the year.

It has raised borrowing costs by 425 bps from May 2022 to March 2023 to curb inflation. — Keisha B. Ta-asan