The Bangko Sentral ng Pilipinas (BSP) absorbed P2.1 trillion in liquidity from the financial system by the end of the third quarter of 2024, up from P1.8 trillion in the same period a year earlier and in the previous quarter, as part of efforts to manage inflation.
The central bank’s operations, which involve removing excess liquidity from banks and parking it in interest-earning facilities, aim to maintain inflation within its 2% to 4% target until 2028. Inflation averaged 3.2% as of November 2024.
The BSP said 42.4%, or P890.4 billion, of total absorbed liquidity came from its securities facility. Placements in the overnight reverse repurchase (RRP) facility accounted for 37.2%, or P781.2 billion, while the term deposit facility (TDF) contributed 11.1%, or P233.1 billion, and the overnight deposit facility (ODF) absorbed 9.3%, or P195.3 billion.
TDF auctions, averaging P210.8 billion weekly in the third quarter, were fully subscribed, with a bid-to-cover ratio of 1.0x for both 7-day and 14-day tenors, the BSP said. Weekly offers of BSP securities rose to P173.3 billion from P168.9 billion in the second quarter, also attracting strong demand.
Average daily placements in the RRP facility, the central bank’s primary monetary policy tool, eased to P414.3 billion in the third quarter from P435 billion in the second quarter but remained at a bid-to-cover ratio of 1.0x.
The BSP reaffirmed its 2% to 4% inflation target until 2028 after a meeting of the Development Budget Coordination Committee on Dec. 2. It said inflation expectations remain anchored, supported by easing monetary conditions and structural reforms, despite risks from external and domestic shocks.
