YIELDS on the Philippine central bank’s term deposits inched up on Wednesday, a day before it holds a meeting where it is widely expected to keep record low benchmark interest rates despite rising consumer prices.

Total tenders for the Bangko Sentral ng Pilipinas’s term deposit facility (TDF) hit P669.409 billion, more than the P480-billion offer. It was also higher than the P653.865 billion in bids it got a week ago, according to data posted on the central bank website.

“The auction results show that amid ample financial system liquidity, market yields continue to rise as the Easter holidays and tax season approach,” BSP Deputy Governor Francisco G. Dakila, Jr. said in a statement.

The demand for the one-week debt paper reached P261.363 billion, more than the P140 billion auctioned off and P181.075 billion in tenders last week.

Accepted rates for the term deposits were 1.71% to 1.899%, compared with 1.64% to 1.999% a week ago. The tenor’s average rate increased by 3.83 (basis points) bps to 1.8432% from March 17.

Meanwhile, the 14-day securities fetched P408.046 billion in tenders, higher than the P340-billion offer. It was lower than the P472.79-billion bids last week.

Accepted rates for the two-week debt were 1.5% to 1.929%, compared with 1.75% to 1.95% a week ago. The average rate for the debt instruments inched up by 0.59 bp to 1.8898% from a week earlier.

The BSP did not offer 28-day debt for the 23rd consecutive week to give way to its weekly auction of bills with the same tenor.

The central bank uses the term deposit facility to mop up excess liquidity in the financial system and guide market interest rates.

“The modest weekly rise in most BSP term deposit facility yields may also be attributed to the recent tighter quarantine restrictions,” Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp. said in an e-mail, citing a fresh surge in coronavirus infections.

This could slow demand conditions and help temper inflation, he added.

Nineteen analysts in a BusinessWorld poll last week unanimously said they were expecting the central bank to keep policy rates to support the economy amid a coronavirus pandemic.

They also expect the monetary policy pause amid a decline in lending activity and rising consumer prices due to low supply after recent typhoons and an African Swine Fever outbreak.

The BSP’s key policy rate is at a record low 2%, while February inflation hit a 26-month high of 4.7% as oil and food prices rose.

Philippine central bank would keep an accommodative policy this year to support the economy amid a coronavirus pandemic, Governor Benjamin E. Diokno said on Wednesday.

The Bangko Sentral ng Pilipinas (BSP) chief said it was too early for exit strategies after monetary authorities relaxed policy measures in 2020.

Still, the central bank would be on the lookout for more visible signs of second-round effects on inflation, he told an online news briefing.

These include a clamor for wage and transport fare increases and expectations of faster inflation, Mr. Diokno said.

“The BSP remains ready to respond to second-round effects,” he said. “Thus far, demand-side pressures remain muted.”

Nineteen analysts in a BusinessWorld poll last week unanimously said they were expecting the central bank to keep the policy rates to support the economy during the pandemic.

They also expect the monetary policy pause amid a decline in lending activity and rising consumer prices due to low supply after recent typhoons and an African Swine Fever outbreak.

The BSP’s key policy rate is at a record low 2%, while February inflation hit a 26-month high of 4.7% as oil and food prices rose. — Luz Wendy T. Noble