The yield on Philippine 20-year bonds had its biggest quarterly drop in seven years after the central bank cut interest rates on special-deposit accounts twice in 2013 and signaled further reductions. The peso rose.
The Philippine peso fell to its lowest level in almost two months as the central bank signaled it is considering additional measures to curb capital inflows that made the currency Asia’s second-best performer last year.
Philippine central bank Deputy Governor Diwa Guinigundo said policy makers will probably raise inflation forecasts for 2012 and 2013, signaling the bank may pause after three interest-rate cuts this year.
The Philippines may shun the global bond market this year, breaking a run of sales that stretches back a decade, as it boosts domestic borrowing amid record-low interest rates, Treasurer Rosalia de Leon said.
The Philippine central bank will have more latitude in setting monetary policy, Deputy Governor Diwa Guinigundo said, commenting on the decision of the U.S. Federal Reserve to replace $400 billion of short-term debt in its portfolio with longer-term Treasuries.