The Bangko Sentral ng Pilipinas said Monday it will shift to a variable-rate format with a pre-determined offer volume in the auction for the overnight reverse repurchase facility beginning Sept. 8, 2023.
It said in a statement the changes are part of the BSP’s set of planned reforms dating back to the adoption of the interest rate corridor framework in 2016. They are largely operational in nature and do not constitute any shift in the BSP’s monetary policy stance.
“These initiatives are geared towards enhancing the transmission of monetary policy by strengthening the link between monetary policy strategy and implementation. The shift to the variable-rate auction format will also help strengthen the price discovery process by providing market participants and monetary authorities alike a market-determined interest rate that conveys the prevailing cost of and demand for overnight funds in the financial system,” the BSP said.
“With these changes, the BSP further aligns its implementation of monetary policy with the best practices in other jurisdictions,” it said.
The BSP’s monetary policy rate will be called the “target RRP rate”. The BSP will signal its monetary policy stance through the target RRP rate.
