BSP raises P100 billion at auction

The Philippine central bank on Friday raised P100 billion from its auction of 28-day bills, with rates rising after hawkish signals from the US Federal Reserve.

The Bangko Sentral ng Pilipinas (BSP) fully awarded the short-term bills, with demand reaching P102.042 billion, lower than in the previous auction.

Banks sought yields of 1.76% to 2.09% — wider than last week — bringing the average rate of the one-month bills 10.5 basis points higher at 1.8749%.

The central bank uses its short-term securities and term deposit facility to mop up excess liquidity in the financial system and guide market rates.

Auction yields for the BSP securities rose as Fed officials reiterated their more hawkish stance on tapering bond purchases, Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., said in a Viber message.

Fed Chairman Jerome J. Powell on Wednesday said they would look into fast-tracking a cut in asset purchases, adding that the Fed would keep inflation in check, Reuters reported.

“We’ve seen the factors that are causing higher inflation to be more persistent” he told the House financial service committee on Wednesday.“Policy has adapted to that and will continue to adapt.”

Mr. Powell said the Fed might taper asset purchases in a few months.

Mr. Ricafort also traced the higher yields in central bank securities to the recent sale of 5.5-year retail Treasury bonds worth P360 billion.

Proceeds of the issuance would fund the government’s pandemic response and economic recovery program, the Treasury bureau said. —

Luz Wendy T. Noble