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Term deposit yields mixed before March inflation data

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YIELDS on the Bangko Sentral ng Pilipinas’ (BSP) term deposits were mixed on Wednesday amid expectations of faster March headline inflation.

The central bank’s term deposit facility (TDF) attracted bids amounting to P382.497 billion on Wednesday, above the P320 billion on the auction block as well as the P253.468 billion seen a week ago for a P250-billion offer.

Broken down, tenders for the seven-day papers reached P223.116 billion, higher than the P180 billion auctioned off by the central bank. This was also more than the P141.985 billion in bids for the P150-billion offer seen the previous week.

Banks asked for yields ranging from 6.53% to 6.5568%, a wider and lower band compared to the 6.5% to 6.57% recorded a week ago. This caused the average rate of the one-week deposits to go up by 0.32 basis point (bp) to 6.5454% from 6.5422% previously.

Meanwhile, bids for the 14-day term deposits amounted to P159.381 billion on Wednesday, higher than the P140-billion offering and the P111.483 billion in tenders for the P100 billion placed on the auction block last week.

Accepted rates for the tenor were at 6.5545% to 6.6% on Wednesday, wider than the 6.57% to 6.605% margin recorded a week ago. With this, the average rate for the two-week deposits inched down by 0.25 bp to 6.5878% from the 6.5903% logged in the prior auction.

The BSP has not auctioned off 28-day term deposits for more than three years to give way to its weekly offerings of securities with the same tenor.

The term deposits and the 28-day BSP bills are used by the central bank to mop up excess liquidity in the financial system and to better guide market rates.

TDF yields were mixed on Wednesday as the market anticipates an uptick in March inflation, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

Headline inflation likely picked up in March amid higher food, utility, and fuel prices, analysts said.

A BusinessWorld poll of 17 analysts conducted last week yielded a median estimate of 3.8% for March headline inflation.

If realized, this would be faster than the 3.4% print in February, but slower than the 7.6% rate recorded in the same month a year ago.

The consumer price index (CPI) would also be within the BSP’s 3.4%-4.3% estimate for the month.

This would mark the second straight month that inflation picked up on a monthly basis and the fourth straight month that the CPI was within the BSP’s 2-4% annual target.

The Philippine Statistics Authority will release March CPI data on Friday.

Mr. Ricafort added that TDF yields were mixed following the budget balance data released earlier this week.

The Bureau of the Treasury (BTr) on Monday reported that the National Government’s budget deficit ballooned by 54.81% to P164.7 billion in February from P106.4 billion a year earlier.

The budget balance swung back to a deficit from the P88-billion surplus in January amid a 22.14% jump in expenditures to P388.7 billion versus a 5.73% growth in revenues to P224 billion.

In the first two months of 2024, the fiscal deficit widened by 26.56% to P76.7 billion from P60.6 billion in the year-ago period. — Luisa Maria Jacinta C. Jocson

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