Benchmark interest rates move sideways


Benchmark interest rates moved sideways on Monday, Oct. 18, as yields for the three-month and one-year IOUs resumed their increase, while the six-month paper marginally dropped.

The 91-day Treasury bill rate, which banks use in pricing their loans, went up to 1.113 percent from 1.095 percent a week earlier.

The yield for the 364-day T-bill also increased to 1.604 percent from 1.587 percent last week.

On the other hand, the 182-day rate slightly slid to 1.390 percent from 1.391 percent previously.

The Bureau of the Treasury accepted P15 billion worth of bids as planned. Investors however were willing to buy more, as tenders reached P36.088 billion.

The treasury bureau, meanwhile, reoffered the one-year paper over the tap facility window for additional P3 billion.

National Treasurer Rosalia de Leon said investors moved sideways following the Bangko Sentral ng Pilipinas’s (BSP) statement that raising interest too soon amid increasing inflation pressures may do more harm than good.

Over the weekend, BSP Governor Benjamin E. Diokno said that this year’s inflation may settle above the 2.0 percent to 4.0 percent target band at 4.5 percent.

However, Diokno said the higher than expected inflation rate is just “transitory” and expected to ease to 3.3 percent next year and 3.2 percent in 2023.

In the first nine-months of the year, inflation averaged 4.5 percent.

“To me, the harm of tightening monetary policy too soon exceeds the harm of moving too late, given that the Philippine economy is at its nascent state of economic recovery,” Diokno said.

The BSP Monetary Board has maintained interest rates at record lows for seven straight rate-setting meetings since November 2020 to allow the country’s economy recovery from the pandemic-induced recession.