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THE government failed to borrow money through the
sale of Treasury bonds that would mature in 2011, as investors
demanded high rates.
At Tuesday’s auction, the
Bureau of Treasury was supposed to sell P7 billion worth of T-bonds,
but investors were willing to buy less than half at P2.98 billion
for an average rate of 7.711 percent.
“They are probably waiting for
BSP’s policy meeting result and they are trying to get a clearer
picture of the inflation expectation,” Finance Undersecretary
Roberto Tan, who also serves as the acting national treasurer, told
reporters after the auction.
The Bangko Sentral ng Pilipinas (BSP)
will meet on Thursday to discuss its monetary policy in light of
rising prices. It has kept its overnight borrowing and lending rates
at 5 percent and 7 percent, respectively.
BSP Governor Amando Tetangco Jr.
earlier said the central bank is unlikely to change its policy
stance, saying the recent inflationary spike is supply side-related,
rendering monetary policy ineffective.
“Our monetary policy stance, at
this point, is appropriate, given that the most significant current
risks are elevated oil and non-oil commodity prices, which are
supply side factors. As you know, this phenomenon is not unique to
the Philippines and is shared by others in the region. As I had said
before, monetary policy may not be the best tool to deal with these
factors,” Tetangco said in a text message to reporters.
“At the same time, we will
ensure we manage liquidity in the system to meet the requirements of
the economy,” he said.
Last month, inflation accelerated
to a 20-month high of 6.4 percent from 5.4 percent in February. The
March inflation breached the BSP’s forecast range. The
higher-than-expected rise was due to record fuel and rice prices.
The BSP has been receiving flak
for its policy stance, with one multinational lender blaming
monetary authorities for their failure to foresee the spike in
prices. This lack of foresight led the BSP to cut its policy rates a
number of times, thus exacerbating the spike in prices.
Another multinational bank said
the BSP should raise rates to address the inflationary pressures,
adding the supply-side origins of the recent episode is no excuse to
stand by and do nothing.
--Chino S. Leyco
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