The Bangko Sentral ng Pilipinas (BSP) has absorbed PHP 1.3 trillion in excess liquidity from the financial system through its open market operations, as reported by BusinessWorld, citing the central bank’s Monetary Policy Report for June 2026.

The absorption, recorded as of 9 June, kept the overnight reverse repurchase rate aligned with the BSP’s policy target.

More than half of the total, 52.3%, was absorbed through the overnight reverse repurchase facility.

Another 21.5% came from the overnight deposit facility. BSP securities accounted for 19.2%, and the term deposit facility (TDF) made up the remaining 6.9%.

Weighted average accepted yield on 28-day BSP bills rose to 4.73% at the 10 July auction, up 2.04 basis points from the previous week.

The rate on seven-day term deposits climbed to 4.7079% from 4.6816% over the same period.

To simplify its liquidity operations, BSP has narrowed its TDF and BSP securities offerings to a single tenor each.

This lets the central bank focus on the tenors that most clearly affect monetary policy transmission.

Inflation pressure linked to the Middle East conflict prompted the central bank’s first rate hike in two and a half years, raised in April with a second increase followed in June, a 25-basis-point hike that brought the target reverse repurchase rate to 4.75%, its highest in almost a year.

Rate changes typically take 18 months to two years to fully work through the financial system, according to the BSP.

Featured image: Edited by Fintech News Philippines based on an image by SalimarTahil via Wikimedia Commons.