The auction of Bangko Sentral ng Pilipinas (BSP) 28-day securities attracted lower bids of P117.75 billion on Friday compared to the previous week’s P162.51 billion.
This resulted to a lower bid coverage ratio of 1.1775 from 1.6251 on July 23. The offer volume remained at P100 billion. The auctions have been mostly oversubscribed since its first offering of P20 billion on September 18, 2020. Its highest offering was P120 billion.
The yield or weighted average interest rate was higher at 1.7769 percent from 1.7602 percent previously. The accepted yield ranged from 1.7350 percent to 1.9279 percent.
The BSP restored its authority to issue its own debt instruments in 2019 when the amended BSP Charter was approved.
The BSP uses its liquidity management facilities such as the BSP securities facility to control inflation by absorbing excess liquidity.
BSP Governor Benjamin E. Diokno said Friday in a forum that they still expect inflation to settle within its two-four percent target for 2021 until 2023. The inflation rate will however remain above four percent for some months still.
“We expect inflation to decelerate close to the midpoint of the target range by the fourth quarter of this year due to the government’s supply-side interventions in addressing shortages of select food items. The risks to the inflation outlook appear to be broadly balanced for 2021 up to 2023,” said Diokno.
The BSP is projecting a higher 4.3 percent inflation for June versus the actual May inflation of 4.1 percent. Downside risks to inflation come from new COVID-19 variants and its resulting lockdown measures to contain its spread, which could delay economic recovery.