TDF rates up Wednesday

Data released by the BSP showed that rate of the seven-day facility improved to 3.4054 percent from 3.3849 percent during the auction last Nov. 8.
(SHUTTERSTOCK)

MANILA— Rates of the Bangko Sentral ng Pilipinas’ (BSP) Term Deposit Facility (TDF) rose Wednesday as tenders for the longer-tenor facility fell anew.

Data released by the BSP showed that rate of the seven-day facility improved to 3.4054 percent from 3.3849 percent during the auction last Nov. 8.

Bids reached PHP45.16 billion, higher than the PHP40 billion offering and the PHP37.57 billion tenders last week.

Bid coverage ratio, thus, rose to 1.1290 from 0.9393 last week.

Rate of the 28-day facility increased to 3.4933 percent from 3.4908 percent in the previous auction.

Tenders totaled to PHP69.186 billion, lower than the PHP90 billion offering and the PHP86.511 billion bids in last week’s auction.

Bid coverage ratio declined to 0.7687 from last week’s 0.9612.

BSP Deputy Governor Diwa Guinigundo attributed the sustained low turnout of bids for the longer-term facility to banks’ anticipation for a hike in the Federal Reserve rates next month.

The Federal Open Market Committee (FOMC) will have its meeting on Dec. 12-13 and it is widely expected to hike rates anew.

If the rate hike happens it would be the third for the year after the 25 basis points increase each last March and June.

Prior to these hikes, the Fed raised its key rates in December 2016, the first after the global financial crisis, as US monetary officials see the sustained growth of the US economy.
Guinigundo said that amid the continued interest rate normalization expectations in the US, investors remain confident of the BSP’s policy stance despite the rise of domestic inflation.

“Banks appear to have been convinced of the BSP’s position that current monetary policy settings remain appropriate given the manageable inflation outlook, well anchored inflation expectations and favorable liquidity and credit conditions.”

“It’s the external factors that seem to be uppermost in the calculus of the market,” he added.

Last October, rate of price increases rose to 3.5 percent from month-ago’s 3.4 percent.

In the first 10 months this year, inflation averaged at 3.2 percent, still within the government’s 2 to 4 percent target for 2017-19.