BSP to have 2 overnight interest rates


Bangko Sentral ng Pilipinas. (File photo / Philippine Daily Inquirer)

MANILA  -The Bangko Sentral ng Pilipinas (BSP) will shift to a variable-rate format with a predetermined offer volume in its overnight reverse repurchase (RRP) auction as part of efforts to enhance its tools to control money supply.

In an RRP operation, the BSP acts as the seller of government securities and the bank’s payment to the BSP mops up the supply of money in circulation.

The BSP said in a statement that the changes in the RRP facility were part of its set of planned reforms dating back to the adoption of the interest rate corridor framework in 2016.

Such changes are largely operational in nature and do not constitute any shift in the BSP’s monetary policy stance. Instead, these initiatives aim to enhance the transmission of monetary policy.

“The shift to the variable-rate auction format will also help strengthen the price discovery process by providing market participants and monetary authorities alike a market-determined interest rate that conveys the prevailing cost of and demand for overnight funds in the financial system,” the central bank said.

“With these changes, the BSP further aligns its implementation of monetary policy with the best practices in other jurisdictions,” it added.

With the shift to a variable-rate auction format, the BSP’s monetary policy rate will be called the “Target RRP Rate,” which will continue to be after each meeting of the Monetary Board on the BSP’s monetary policy stance. The RRP facility remains the BSP’s primary monetary policy instrument.

—Ronnel W. Domingo INQ

Your subscription could not be saved. Please try again.

Your subscription has been successful.

Read Next

Don’t miss out on the latest news and information. facebook follow

Subscribe to INQUIRER PLUS to get access to The Philippine Daily Inquirer & other 70+ titles, share up to 5 gadgets, listen to the news, download as early as 4am & share articles on social media. Call 896 6000.

For feedback, complaints, or inquiries, contact us.

Source link

Denial of responsibility! Planetconcerns is an automatic aggregator around the global media. All the content are available free on Internet. We have just arranged it in one platform for educational purpose only. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, all materials to their authors. If you are the owner of the content and do not want us to publish your materials on our website, please contact us by email – [email protected]. The content will be deleted within 24 hours.

Leave a comment