Investors pressed for an increase in Philippine benchmark interest rates for short-term loans following the US Federal Reserve’s pronouncement that it will likely begin reducing its monthly bond purchases.

At Monday’s auction of Treasury bills, Oct. 11, the bellwether 91-day T-bill rate, which banks use in pricing their loans, rose to 1.095 percent from 1.085 percent previously.

The Bureau of the Treasury sold the P5-billion worth of three-month debt papers on offer. Investors however were asking for P11.37 billion more of the government security or IOU.

Yield on the 364-day T-bill also inched up to 1.587 percent from the previous 1.584 percent as investors were willing to buy P16.86 billion of the one-year IOUs. The government only accepted P5 billion.

Interest rates on the 182-day T-bill, meanwhile, was unchanged at 1.391 percent with total tenders for the six-month paper amounting to P18.36 billion, of which the government accepted P5 million as planned.

Earlier, US Fed Chair Jerome Powell said they would soon begin the process of reducing the central bank’s $120 billion in monthly bond purchases should one more “decent” jobs report is seen.

National Treasurer Rosalia V. de Leon said this unwinding of accommodative monetary stance pressured investors to ask for higher interest rates.

“Locally, market expects high inflation to be temporary starting slowing inflation in September,” De Leon added.

Source: Manila Bulletin (