YIELDS on the central bank’s term deposit facility (TDF) ended mixed on Wednesday as inflation accelerated in April but remained within target.

The term deposits of the Bangko Sentral ng Pilipinas (BSP) fetched bids amounting to P228.414 billion on Wednesday, below the P260 billion on the auction block and the P250.729 billion in tenders for a P320-billion offer seen a week ago.

Broken down, tenders for the seven-day papers reached P103.078 billion, below the P120 billion auctioned off by the central bank and the P110.571 billion in bids for a P160-billion offering of six-day deposits seen the previous week.

Banks asked for yields ranging from 6.51% to 6.5%, slightly narrower than the 6.5% to 6.55% band seen a week ago. This caused the average rate of the one-week deposits to inch down by 0.03 basis point (bp) to 6.5306% from 6.5309% a week earlier.

Meanwhile, bids for the 14-day term deposits amounted to P125.336 billion, lower than the P140-billion offering and the P140.158 billion in tenders for the P160 billion worth of 13-day papers placed on the auction block on May 2.

Accepted rates for the tenor were from 6.54% to 6.6%, a tad wider than the 6.5495% to 6.6% margin seen a week ago. With this, the average rate for the two-week deposits rose by 0.29 bp to 6.5736% from 6.5707% logged in the prior auction.

The BSP has not auctioned off 28-day term deposits for more than three 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 BSP to mop up excess liquidity in the financial system and to better guide market rates.

TDF yields were mixed following the release of April inflation data on Tuesday, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

Headline inflation accelerated for a third straight month to 3.8% in April from 3.7% in March, the Philippine Statistics Authority reported on Tuesday.

The April print was slower than the 6.6% print in the same month a year ago and was within the BSP’s 3.5-4.3% forecast.

It also marked the fifth straight month that inflation settled within the central bank’s 2-4% target band.

Still, the latest inflation print was below the 4.1% median estimate in a BusinessWorld poll of 16 analysts conducted last week.

For the first four months, headline inflation averaged 3.4%. The BSP expects full-year inflation to settle at 3.8%.

Mr. Ricafort said recent signals of policy easing from US Federal Reserve policy makers also affected term deposit yields this week.

On Tuesday, Minneapolis Fed President Neel Kashkari suggested the US central bank may need to forgo interest rate cuts this year due to stubborn inflation, Reuters reported.

Mr. Kashkari said at a Milken Institute conference that stalled inflation, kept higher in part by housing market strength means the central bank will need to hold borrowing costs steady for an “extended period,” and possibly all year.

Mr. Kashkari did, however, also say it is still possible the Fed could cut if inflation begins to cool again.

The comments came on the heels of remarks from Fed officials on Monday that seemed to lean toward indicating the central bank’s next move would be to lower interest rates.

Last week, Fed Chair Jerome H. Powell said the wait to loosen policy is taking longer than anticipated, but signaled his inclination is still to cut.

And while prices have been sticky, the labor market showed some signs of weakening in the monthly payrolls data from Friday. Consumer price data in a week from now will be closely watched.

The US central bank kept its Fed funds rate steady at 5.25%-5.5% at its April 30-May 1 meeting.

Following last week’s Fed policy meeting and softer-than-expected US jobs report, market expectations for two rate cuts this year have increased, with expectations for a cut of at least 25 bps in September currently at 64.5%, according to CME’s FedWatch Tool.

With a light economic calendar this week, highlighted by the consumer sentiment reading from the University of Michigan on Friday, a host of Fed officials are due to speak, including Fed Governors Lisa Cook and Michelle Bowman later in the week. — Luisa Maria Jacinta C. Jocson with Reuters