THE BANGKO SENTRAL ng Pilipinas (BSP) has mopped up over P1 trillion in excess money supply from the market through its monetary operations as of early this year, a report showed.

In its February 2026 Monetary Policy Report, the central bank said its monetary operations have absorbed P1.2 trillion in liquidity as of Feb. 11.

“The BSP’s monetary operations effectively kept the overnight reverse repurchase rate aligned with the target reverse repurchase rate,” the BSP said.

The central bank uses facilities such as the overnight reverse repurchase (RRP) facility, term deposit facility (TDF) and BSP securities to siphon off excess liquidity from the financial system and better guide market rates towards its policy rate.

Based on BSP data, its overnight RRP facility absorbed most of the market’s liquidity at 44.4% of the total. This was followed by the BSP bills with 28.5%, overnight deposit facility with 18.2%, and the TDF with 9%.

On Monday, the weighted average interest rate (WAIR) for the 28-day BSP bills climbed to 4.4856% from 4.4464% on March 13. Meanwhile, the seven-day term deposits posted a 4.2308% WAIR on Wednesday, down from 4.2331% a week ago.

The central bank has not auctioned off the 14-day TDF and the 56-day BSP bills since November last year. It is now only offering a single tenor for each facility, namely, the one-week paper for the TDF and the one-month security for the BSP bills.

“Beginning November 3, 2025, the BSP shifted to a single-tenor offering for its term facilities to rationalize liquidity operations and concentrate on tenors that would enhance monetary policy transmission, retaining the 7-day TDF and 28-day BSP bill,” the BSP said in its report.

BSP Deputy Governor Zeno Ronald R. Abenoja earlier told BusinessWorld that the central bank initially decided to limit its monetary operations amid the anticipated high demand for liquidity during the holiday season.

The central bank also noted that interest rates in the overnight RRP facility and TDF have  already reflected 200 basis points (bps) out of the 225 bps in cuts delivered since its easing cycle started in August 2024.

The Monetary Board last slashed benchmark borrowing costs by 25 bps for a sixth straight time at its Feb. 19 policy review, bringing the policy rate to 4.25%, the lowest in over three years. It likewise lowered the rates on the overnight deposit and lending facilities by 25 bps each to 3.75% and 4.75%, respectively.

BSP Governor Eli M. Remolona, Jr. has said that policy rate adjustments typically take one-and-a-half to two years to make their way through the financial system. — Katherine K. Chan

RELATED ARTICLESMORE FROM AUTHOR