The auction of the central bank’s securities facility on Friday, May 26, attracted total bids of P172.06 billion, higher than the previous week’s P168.52 billion. Bangko Sentral ng Pilipinas (BSP) Deputy Governor Francisco G. Dakila Jr. said there was sustained demand for the 28-day BSP bills. Of the bids received, the BSP accepted P120 billion. Tenders was an oversubscription of 1.434x of the volume offered. The bid coverage ratio stood at 1.4228, higher than 1.4044 last week. Meanwhile, the average interest rate declined by 4.6022 basis points to 6.6762 percent from 6.7222 percent. The BSP’s accepted yields ranged from 6.6000 percent to 6.7140 percent compared to May 19’s 6.6850 percent to 6.7500 percent. “Demand for BSP securities remained strong following the BSP’s decision last week to pause its monetary policy tightening,” said Dakila. The BSP bills is part of the central bank’s interest rate corridor system. The facility is one of BSP’s primary tools to manage inflation by controlling the amount of liquidity in the financial system. At the moment, there is only one tenor offered, the 28-day, but BSP Governor Felipe M. Medalla said last week that they plan to offer 56-day maturity when the time is right. The BSP on May 18 decided to retreat from its year-long tightening stance by keeping its overnight reverse repurchase (RRP) rate unchanged at 6.25 percent. The interest rates on the overnight deposit and lending facilities were also left unchanged at 5.75 percent and 6.75 percent, respectively. Medalla said they could maintain a hold stance for two to three more Monetary Board policy meetings before taking further action. The implication is the pause will last until August or September this year. That is, if inflation will continue to decline to below four percent by the fourth quarter this year, as the BSP expects.