Short-term benchmark interest rates slightly rose as investors anticipated inflation last month moved at a much faster pace than the government’s target.
At a Bureau of the Treasury auction on Monday, Oct. 4, the bellwether 91-day Treasury bill rate, which banks use in pricing their loans, climbed to 1.085 percent from 1.060 percent previously.
The Treasury bureau sold the P5-billion worth of three-month debt papers on offer. Investors, however, were asking for P13.01 billion more of the government security or IOU.
The 182-day T-bill rate also increased to 1.391 percent from 1.385 percent a week ago, as the government borrowed P5 billion from the sale of the six-month debt papers, even as investors were willing to lend as much as P22.42 billion.
Moreover, the yield on the one-year IOU marginally advanced to 1.584 percent from 1.582 percent last week, with total tenders amounting to P20.92 billion, of which the government accepted P5 million as planned.
Asked if the expected faster price increases in September affected Monday’s auction, National Treasurer Rosalia V. de Leon said “Yes, but not so much especially for 182-day and 364-day.”
The Philippine Statistics Authority is scheduled to release the September inflation report on Tuesday, Oct. 5, which analysts projected may settle beyond the government’s target of 2.0 percent to 4.0 percent.
Last week, the Bangko Sentral ng Pilipinas (BSP) released the September inflation forecast band of 4.8 percent to 5.6 percent.
The BSP’s forecast range is quicker compared with P4.9 percent in August and 2.3 percent a year earlier.
Analysts attributed the quicker inflation to low base effect and high food prices.