Benchmark yields for short-term loans were significantly higher this week amid the policy rate increase forcing the Bureau of the Treasury to partially borrow.

At Tuesday's auction of Treasury bills on Oct. 31, the national government raised a total of P12.75 billion, below the P15 billion program. Demand across the board reached P21.941 billion.

The 89-day Treasury bill rate increased to 6.343 percent from 6.149 percent last week. It was also higher than secondary market yield of 6.081 percent.

The Treasury sold all P5 billion worth of almost three-month debt papers. Investors were asking for P7.84 billion of the government security or IOU.

Yield on the 179-day T-bill also rose to 6.462 percent from the previous 6.330 percent as investors were willing to buy P6.41 billion of the almost six-month IOUs. The government awarded only P3.95 billion.

Interest rate on 179-day papers also settled higher compared with the secondary market rate of 6.229 percent.

Lastly, interest rate on the 362-day IOU inched up to 6.592 percent from 6.479 percent last week. It was also above the secondary’s 6.494 percent.

The 362-day debt papers attracted P7.70 billion worth of bids, and the government accepted only P3.80 billion.

The central bank’s monetary board last week raised policy rates by another 25 basis points with the expectations that inflation will continue to be above target until the first half of 2024.

Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp. (RCBC), also said the further growth on interest rates can be attributed to the hawkish signals of another increase in local policy rate hike on the next rate-setting meeting on Nov. 16.