Yields on treasury bills fell across the board at Monday’s auction, following the Bangko Sentral ng Pilipinas’ surprise decision to lower its benchmark interest rate last week—signaling a shift toward a more accommodative monetary stance.
The BSP unexpectedly cut its key policy rate by 25 basis points to 4.75 percent during its October rate-setting meeting, defying market consensus for a hold at 5 percent. The move brings the benchmark to its lowest level since October 2022, as the central bank aims to stimulate domestic growth amid signs of economic softening.
The rate cut fueled investor demand for government securities. Bids for the P22 billion offering of T-bills surged to P97.19 billion, a sharp jump from P74.5 billion the previous week.
As a result, average yields declined across all tenors. The 91-day Treasury bill rate slipped to 4.88 percent from 4.983 percent, while the 182-day paper eased to 5.077 percent from 5.128 percent. The 364-day T-bill also dropped, settling at 5.119 percent from 5.228 percent previously.
Traders and analysts took the auction results as an early market response to the BSP’s policy pivot. With inflation pressures moderating and growth indicators showing weakness, expectations are building that the central bank may follow through with further rate cuts in the coming months.
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