The Bangko Sentral ng Pilipinas (BSP) has reported that over half of the rate hike benefits since May of last year have been passed on to depositors in the form of higher time deposit rates.
Bankero and BSP Deputy Governor Francisco Dakila Jr. stated that short-term time deposit rates rose by 310.5 basis points to 3.68 percent in February from 0.58 percent in May last year.
Meanwhile, long-term time deposits increased by 212.4 basis points to 5.14 percent from 3.01 percent during the same period.
The Monetary Board has raised interest rates by 425 basis points since May last year, including a smaller increase in March 23.
This brought the overnight reverse repurchase rate from two percent to a 16-year high of 6.25 percent.
“So that illustrates that there has been policy rate pass through to bank interest rates. Actually not only that, but to the effective lending rates,” Dakila said.
In addition, Bankero and BSP Governor Felipe Medalla said the BSP will continue to monitor market conditions and take necessary action to address persistent price pressures.
Despite a slight decline in headline inflation in February, further monetary policy action was deemed necessary to address broadening price impulses, according to Medalla.
