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By Chino S. Leyco, Reporter
INFLATION expectations and fears of the Bangko
Sentral ng Pilipinas’ (BSP) future response pushed the interest
rate on longer-term debt papers higher, the Bureau of Treasury said.
The government on Tuesday accepted investors’
bid of 6.414 percent for P4.505 billion worth of three-year Treasury
bonds, higher than the 5.375 percent the IOUs fetched during a July
10 auction last year. The government had planned to borrow P7
billion through the sale of these papers.
“The main fact drivers right now [are] the
inflation expectation and the policy response of BSP on this
development,” Finance Undersecretary Roberto Tan, who also serves
as the acting national treasurer, told reporters.
Tan said the new rate reflects the secondary
market, adding the government has maturing obligations worth P4
billion.
“We just supplied some liquidity because of
maturities,” he said.
The BSP earlier said that price increases may
accelerate further into the second half of the year, but insisted
that the inflation outlook for next year remains within its target
of between 2.5 and 4.5 percent.
For this year, it set a target of 3 to 5
percent. Monetary authorities however are reviewing their forecast
in light of costlier fuel, food and other commodities.
Last week, the government announced that
inflation last March climbed to a 20-month high of 6.4 percent, from
2.2 percent a year ago and 5.4 percent last February, bringing the
first-quarter average to 5.6 percent.
Inflation pressures came from higher prices of
food, including rice and corn, the BSP said.
Its policy-making Monetary Board will meet on
April 24 to decide on any interest rate action.
At present, its overnight rates stand at 5 and 7
percent for the borrowing and lending windows, respectively.
The BSP kept its policy rates steady last month
despite its US counterpart’s continued easing. Local monetary
authorities however closed some of the short-term windows of its
special deposit account, while trimming the rates on the remaining
ones, after traders blamed this facility for the government’s
failure to raise short-term money through the treasury bureau’s
regular auctions.
Banks and other investors had been trying to bid
up rates during the auctions for Treasury bills and bonds to
approximate the yields they have been enjoying from tapping the
central bank’s SDA.
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