By Lee C. Chipongian Yields of the three-tenor term deposit facility (TDF) continue to increase this week on a higher offer volume of P100 billion from the previous P80 billion, based on Bangko Sentral ng Pilipinas (BSP) data. The average rates of the TDF has been increasing in past weeks ahead of the Monetary Board policy meeting on August 8, where market expectations are mixed but majority of analysts expect another rate cut this quarter. Tenders were lower this week at P88.68 billion against offer of P100 billion. In July, the BSP adjusted the volume three times after reducing reserve requirement ratio (RRR) by 200 basis points (bps) and releasing an additional P195 billion liquidity into the financial system. The 7-day TDF, offered at a higher P40 billion from last week’s P30 billion, received bids worth P31.25 billion. The average rate was up at 4.5967 percent from 4.5679 percent. The 14-day tenor, still offered at P30 billion, attracted P29.77 billion tenders while its average rate moved up to 4.6548 percent from 4.6277 percent. The 28-day TDF was also undersubscribed at P27.61 billion against offer of P30 billion, which was a higher volume than July 24’s P20 billion. Yields rose to 4.6853 percent from 4.6495 percent. The BSP announced late Monday that liquidity forecasters raised the TDF volume by P20 billion after it has cut RRR in three stages for all banks beginning on May 31. Last June 20, the BSP decided to pause on its policy rate easing after it cut RRP or reverse repurchase rate by 25 bps last May 9. This was followed by a Monetary Board decision to reduce the RRR. BSP Governor Benjamin E. Diokno reiterated its data-dependent actions on monetary stance and on August 8, he said the need to assess further monetary accommodation will depend on how strong growth drivers will be although he clearly expects a steady recovery in household spending as commodity prices continue to stabilize. Diokno said in July that before another RRR cut is implemented, the BSP will reduce its policy rate first, mostly likely in the third quarter, based on his estimate that inflation rate will drop below two percent in August or September.