THE recent policy rate setting may have had a “partial pass-through” on the recent auction of interest-bearing term deposits, the central bank said.
The Bangko Sentral ng Pilipinas (BSP) received last Wednesday total tenders worth P278.886 billion, which was below the BSP’s expected volume range. The central bank increased the offer volume in the Term Deposit Facility (TDF) auction to P360 billion from P350 billion in the previous week. The BSP awarded a total amount of P142.205 billion from P142.235 billion in the 7-day TDF and accepted all bids received amounting to P136.681 billion in the 14-day TDF.
“The results of the TDF auction reflected the partial pass-through of the BSP policy rate hike last week. Going forward, the BSP’s monetary operations will remain guided by its assessment of the latest liquidity conditions and market developments,” BSP Deputy Governor Francisco G. Dakila Jr. said.
The volume was allocated between the 7-day and 14-day tenors at P200 billion from P210 billion and P160 billion from P140 billion, respectively.
However, the BSP said both tenors were undersubscribed with bid-to-cover ratios at 0.71x and 0.85x the respective volume offered in the 7-day and 14-day TDF.
The resulting weighted average interest rates (WAIR) for the awarded bids in both tenors continued to increase from the rates last week.
The WAIR for the 7-day tenor rose by 21.3347 bps to 5.4921 percent as that for the 14-day tenor increased by 19.7338 bps to 5.6635 percent.
The yields accepted in both tenors also continued to shift higher and widened to a range of 5.1-5.825 percent in the 7-day TDF and 5.1500-6 percent in the 14-day TDF.
According to the National Economic and Development Authority (Neda) and local economists, monetary authorities’ decision to hike interest rates due to the recent policy action of the US Federal Reserve may temper the country’s growth prospects.
The recent decision of the Monetary Board to raise interest rates by 75 basis points increased the BSP’s overnight repurchase facility rate to 5 percent from 4.25 percent.