MANILA – After four weeks of suspension, the Bangko Sentral ng Pilipinas (BSP) on Wednesday resumed the auction for its term deposit facility (TDF) and it attracted strong demand even if only the seven-day facility was offered.
Tenders reached PHP78.5 million, more than twice the PHP30-billion offer which, in turn, was fully awarded.
Rate of the facility averaged at 2.96 percent, 79.8 basis points lower than the 3.7557 percent in the last auction last March 11.
“The rate decline reflects in part the 50-bp (basis-point) cut in the BSP’s policy rate on 19 March,” BSP Deputy Governor Francisco Dakila Jr. said in a statement Wednesday.
He was referring to the decision of the policy-making Monetary Board (MB) to slash the central bank’s key policy rates by 50 basis points to help buoy the domestic economy as provided primarily by the continued deceleration of inflation rate.
To date, the BSP’s key rates have been reduced by a total of 75 basis points since the start of the year while a 25-basis-point reduction was made in September last year.
However, these cuts remain short of the 175-point hike in the key rates from May 2018 until August 2019 made to counter the impact of the elevated inflation rate in 2018 caused by supply-side factors.
Inflation peaked at 6.7 percent in September and October 2018.
BSP suspended the TDF auction after Metro Manila was placed under community quarantine last March 15 to address the rise of infections from coronavirus disease 2019 (Covid-19). The quarantine was expanded to the whole of mainland Luzon by March 16.
The enhanced community quarantine (ECQ) was originally set until April 12 but was extended until April 30.
Local and provincial governments in the Visayas and Mindanao are also implementing various levels of quarantine.
Under ECQ, only those working in essential services like the health care sector, as well as supermarkets, drug stores, and related logistics, are allowed to go out and work.