ACCELERATED inflation concerns pushed up rates on Monday but the Bureau of the Treasury still ended up fully awarding P20 billion in Treasury Bills (T-bills) as the auction was oversubscribed with total bids reaching P44 billion, more than twice the P20-billion offer.
National Treasurer Rosalia V. De Leon attributed the continued uptick in the T-bill yields to a “hangover from elevated inflation.” De Leon noted the rates also tracked the upward movement of US Treasuries.
The 91-day T-bills capped at an average rate of 1.139 percent, 9.9 basis points higher than 1.04 percent in the previous auction. Total tenders for the security reached P14.467 billion, nearly thrice the P5-billion offer.
Meanwhile, the average rate for the 182-day T-bills rose by 9 basis points to reach 1.316 percent from 1.226 percent previously. Bids for the tenor hit P10.915 billion, more than twice the P5 billion offer.
The 364-day T-bills fetched an average rate of 1.852 percent, a 17.2 basis point hike from 1.68 percent in last week’s auction. Bids amounted to P18.62 billion, exceeding the P10-billion offer.
The country’s inflation rate continued its climb from 4.6 percent in January to 4.7 percent in February, government data last Friday revealed. The February figure is the highest since the 5.1 percent recorded in December 2018 and the 2.6 percent in February last year.
In the first two months of the year, inflation averaged 4.5 percent. For this year, the government’s target range for inflation is 2 to 4 percent.
Bangko Sentral ng Pilipinas Governor Benjamin E. Diokno last Friday allayed investor worries on the spike, saying the acceleration of prices in February are still supply-side in nature and will likely taper off in the coming months. (See, “BSP won’t act on inflation till there’s evidence of second-round effects,” in the BusinessMirror, March 6, 2021).
Some economists, like Ben Broadbent, Deputy Governor, Monetary Policy of the Bank of England, has demurred in September last year that higher inflation may ease fiscal constraints. Broadbent mused that government spending as the source of inflation and funded through debt, but debt that is not onerous, may help the economy.
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