BSP mops up P1.4-T liquidity as easing cycle takes hold

Domestic liquidity expanded at a faster pace in August as the Bangko Sentral ng Pilipinas (BSP) continued to manage excess funds in the financial system following a series of policy rate cuts.

- By KEISHA TA-ASAN

In its latest monetary policy report, the central bank said it absorbed P1.4 trillion in liquidity as of Aug. 5 through its regular market operations, with nearly half or 46.5 percent of the amount placed in the BSP Securities Facility.

The rest of the excess cash was mopped up through the overnight reverse repurchase (RRP) window at 27.6 percent, the overnight deposit facility at 16.8 percent and the term deposit facility (TDF) at 9.1 percent.

The BSP’s open market operations kept the overnight RRP rate closely aligned with the target policy rate, which was lowered by 25 basis points to five percent in late August.