RATES continued to rise on Monday’s auction days after monetary authorities said inflation is expected to peak in the second quarter of this year.
Despite the uptick in average rates across all tenors for several weeks, the Bureau of the Treasury (BTr) fully awarded on Monday about P20 billion in Treasury Bills (T-bills), raising more money amid a rising budget deficit.
The auction was still oversubscribed as it attracted tenders of P42.4 billion, more than double the offering.
Following the auction, National Treasurer Rosalia V. De Leon told reporters that “supply-side constraints pushed rates up as we also see oil prices increasing.”
De Leaon said the rates are “rising with expectation of higher inflation print seen to peak in the second quarter.”
“Domestic rates also trended up as US Treasuries adjusted upwards with good prospects of strong rebound with stimulus package,” the National Treasurer said referring to the $1.9-trillion stimulus package that US President Joe Biden greenlighted.
The 91-day T-bills’ average rate spiked to 1.232 percent, up by 9.3 basis points (bps) from 1.139 percent in the last auction. Bids for the tenor amounted to P13.46 billion, more than twice the P5-billion offer.
Meanwhile, the 182-day T-bills’ average rate surged to 1.527 percent, a 21.1-bps increase from P1.316 percent previously. Tenders for the security hit P8.6 billion, exceeding the P5-billion offer.
For the average rate of 364-day T-bills, it was recorded at 1.99 percent, jumping by 13.8 bps from previous auction’s 1.852 percent. Total bids for the security reached P20.34 billion, double the P10-billion offer.
Inflation in February soared to 4.7 percent, higher than the 2.6 percent recorded for February last year and the 4.2 percent last January. Inflation averaged 4.5 percent in the first two months of the year.
Last Friday, Bangko Sentral ng Pilipinas Governor Benjamin E. Diokno said they are “not inclined” to tighten monetary policy at this juncture, despite its forecast that inflation will likely continue to rise in the next few months.
Diokno said inflation pressures continue to be “transitory” and “supply-side” in nature and, therefore, do not warrant any movements from the monetary policy side.