BSP to maintain key interest rates

The Bangko Sentral will keep interest rates steady in the near term.

"The market is expecting higher interest rates because of the peso weakness but they are not taking into account that the US Federal Reserve would cut rates sooner than later. This will give us the flexibility to keep rates flat," said Bangko Sentral Governor Rafael Buenaventura.

The Bangko Sentral’s overnight borrowing rate is currently at 10 percent while the overnight lending rate is at 12.25 percent.

Buenventura said yesterday’s rise in the benchmark 91-day Treasury bill rate is a "normal correction."

The Bureau of the Treasury received total tenders of P1,865 billion for the 91-day bills. It fully awarded the benchmark bill at an average rate of 10,027 percent, up from last week’s 9.959 percent.

The BTr rejected all tenders for the 182- and 364-day bills.

National Treasurer Sergio Edeza said yesterday government is ready to reject bids again next week if T-bill rates do not fall by at least 10 basis points.

"Either we will see rates move down or we will just reject. The yield curve has become so steep," he said.

"We don’t think it is right for us to accept bids at these levels," he said.