Interest rates on the Bangko Sentral ng Pilipinas’ (BSP) term deposit facilities (TDF) continued to ease in the latest auction, reflecting stable liquidity conditions in the financial system.

Data from the BSP showed that the weighted average interest rate for the 7-day TDF slipped by 1.75 basis points to 4.8073 percent, while the 14-day tenor dropped by 1.34 basis points to 4.8216 percent in the October 29, 2025 auction.

The central bank kept the total offer volume at P130 billion, split between P60 billion for the 7-day and P70 billion for the 14-day term deposits. The 7-day facility was 1.25 times oversubscribed, while the 14-day offering posted a bid-to-cover ratio of 0.97, indicating slightly softer demand for longer placements.

The BSP fully awarded the 7-day bids and accepted P68.13 billion in tenders for the 14-day facility. Accepted yields narrowed to 4.79–4.83 percent for the shorter tenor and 4.77–4.87 percent for the longer tenor, showing tighter pricing among participating banks.

The term deposit facility is one of the BSP’s liquidity management tools used to absorb excess money circulating in the banking system. Under this mechanism, banks park their surplus funds with the BSP for short, fixed periods—typically seven or 14 days—in exchange for interest.

By adjusting the TDF rates and volumes, the BSP can influence short-term market interest rates and manage liquidity conditions, ensuring that there is neither too much nor too little money in circulation.

When banks find it attractive to deposit excess funds with the BSP, liquidity in the market tightens slightly, helping moderate inflation and stabilize the peso. Conversely, lower TDF rates tend to release more funds into the economy, supporting credit activity and investment.

Continued easing of TDF yields suggests that liquidity remains ample, with banks showing confidence in current monetary conditions. The results also indicate that the BSP’s policy stance remains steady, as inflation pressures appear manageable heading into the fourth quarter.