The Bangko Sentral ng Pilipinas auctioned seven‑day term deposits this week, receiving P146.927 billion in tenders against an offer of P110 billion.
While the total bids slightly lagged the previous auction’s P147.021 billion, the bid‑to‑cover ratio fell to 1.3357, down from 1.3366.
Despite the modest ratio shift, the central bank fully allocated the P110 billion offering.
Accepted rates ranged from 4.25 % to 4.7449 %, a marginally broader band than the prior 4.25 % to 4.74 % range, pushing the weighted‑average accepted rate up 5.72 basis points to 4.6816 %.
The rise in average yield reflects hawkish signals from both the Philippine central bank and the U.S. Federal Reserve, according to the chief economist of a major commercial bank.
The central bank has indicated further rate hikes are likely as inflation remains elevated, and a recent P85 minimum‑wage increase in Metro Manila could trigger additional price pressures.
Nevertheless, the term‑deposit facility’s average auction rate stayed below the BSP’s overnight borrowing rate of 4.75 %, underscoring strong demand that suggests excess liquidity in the banking system.
On June 18, the Monetary Board raised benchmark interest rates by 25 basis points for a second consecutive meeting, aiming to counter persistent price pressures from global oil shocks and to anchor inflation expectations.
In the United States, the Federal Reserve kept its policy range at 3.5 %–3.75 % but signaled expectations of further hikes this year, with market participants assigning a 65 % probability of an increase by September.
The BSP employs the term‑deposit facility and bills to absorb surplus liquidity and steer market yields toward its policy rate.
Its latest Monetary Policy Report notes a shift to a single‑tenor offering to streamline liquidity operations and enhance monetary‑policy transmission.
Since mid‑February, BSP market operations have removed approximately P1.2 trillion of excess liquidity, with about 9 % of that volume absorbed through the term‑deposit facility.
