BANGKO SENTRAL ng Pilipinas’ (BSP) One-week deposits saw lower yields on Wednesday as the offering attracted strong demand with another rate cut expected this week.
Total tenders for the seven-day facility (TDF) stood at P124.877 billion, surpassing the P90 billion sold by the BSP but lower than the P132.961 billion of the P110 billion tenders offered last week.
This translated to a bid-to-cover ratio of 1.3875 times, higher than the 1.2087 ratio recorded last week.
As a result, the BSP made a full P90-billion award of its TDF contribution.
Accepted rates ranged from 4.45% to 4.495%, which is much lower than the 4.45% to 4.505% band seen during the previous auction. This caused the weighted average yield received for one-week deposits to decrease by 1.29 basis points (bps) each week to 4.4794% from 4.4923%.
“BSP TDF average auction yields continued to ease slightly a day ahead of a widely expected 25-bp rate cut at the BSP’s next rate-setting meeting on Feb. 19,” Rizal Commercial Banking Corp. said. Chief Economist Michael L. Ricafort in a Viber message.
He said the peso’s recent rise against the US dollar could help lower import costs, which could keep inflation in check to boost the central bank’s monetary easing.
All 16 analysts in a BusinessWorld The poll said they expect the Monetary Board to deliver a sixth consecutive 25-bp rate cut at its first meeting of the year on Thursday to bring the policy rate to 4.25% amid weak economic growth and negative inflation.
The BSP has reduced its benchmark borrowing costs by a total of 200 bps since it began its current round of reductions in August 2024.
BSP Governor Eli M. Remolona, Jr. previously said further cuts are possible at this week’s review but reiterated that their rate cut cycle is nearing its end as they expect the economy to rebound this year and inflation to return within its annual target after months of below-target printing.
Gross domestic product growth in the Philippines fell to a five-year low of 4.4% last year, missing the government’s target of 5.5%-6.5% due to the economy’s collapse in the corruption scandal. that stopped both public and private spending.
Inflation rose to 2% in January from 1.8% in December but fell from 2.9% in the same month last year. This was the fastest in 11 months or since 2.1% in February 2025, and was the time to keep the consumer price index within the BSP’s annual target of 2%-4%.
Mr. Ricafort added that demand remains strong as the P232.8-billion seven-year bond maturing on Feb. 14 freed up liquidity that players could reinvest in instruments to get a return.
The central bank uses TDF and BSP loans to raise excess liquidity in the financial system and better align market prices to policy rate estimates.
It last sold seven-day and 14-day deposits on Oct. 29. It has not offered a 28-day deposit for more than five years to accommodate its weekly offering of securities with the same tenor.
BSP Deputy Governor Zeno Ronald R. Abenoja earlier said the central bank has reduced its issuance of short-term paper to improve the transmission of monetary policy and encourage banks to better manage their money.
Based on the BSP’s latest monetary policy report, its market operations have attracted P1.5 trillion of market capitalization as of mid-November 2025, and 5.4% of this was captured through the use of time deposits. – Katherine K. Chan
