Term deposits fetch record low yields

Term deposits fetched record low yields amid strong demand from investors following the surprise 50-basis point interest rate cut last week, the Bangko Sentral ng Pilipinas (BSP) said.

BSP Deputy Governor Francisco Dakila Jr. said rates at the term deposit facility (TDF) auction fell across all tenors yesterday after the central bank’s Monetary Board slashed interest rates by another 50 basis points last June 26.

“Strong market appetite as well as the 50-basis point policy rate cut by the BSP effective June 26 led to further declines in TDF rates,” Dakila said.

The central bank has slashed interest rates by a total of 175 basis points this year, bringing the overnight reverse repurchase rate to an all-time low of 2.25 percent, including the 50 basis points cut last Thursday, due largely to the potential impact of a deeper and more disruptive coronavirus disease 2019 or COVID-19 pandemic.

Dakila said average interest rates continued to decline, with the yield of the sevenday term deposits plunging by 49.32 basis points to 1.7573 percent from last week’s 2.2504 percent and that of the 14-day tenor dropping by 49.86 basis points to 1.7522 percent from 2.2508 percent.