The Monetary Board, in its meeting on 13 December 2019, approved the adoption of a flexible term premium (in lieu of the fixed term premium) in order to arrive at the appropriate rediscount rate. Under this policy, the Bangko Sentral ng Pilipinas (BSP) will have the flexibility to recalibrate the rates in response to changes in monetary management and/or economic conditions. Accordingly, effective 28 January 2020, the BSP will change its rediscount rates for the Peso and Dollar/Yen Rediscounting Facility pursuant to Circular No. 1071 dated 08 January 2020.
Under the said Circular, the Peso rediscount rates remain to be based on the BSP overnight lending rate plus a spread depending on the term of the loan (i.e. 1-90 days and 91-180 days), while the rates for the Exporters Dollar and Yen Rediscount Facility (EDYRF) will continue to be based on the 90-day London Inter-Bank Offered Rate (LIBOR) plus the spread depending on the term of the loan (i.e. 1-90 days, 91-180 days and 181 to 360 days). The appropriate spread for each term of the loan may change periodically to complement changes in the BSP's monetary policy goals and to reflect movements in the market interest rates.
In this regard, the applicable rediscount rates for the Peso and the EDYRF are now as follows: Such amendment in the rediscount rates is part of the broader reforms of the BSP to bring its policies in line with its lender of last resort function and to ensure that the rediscounting policies remain relevant to the present and future demands on monetary management. The changes in the rediscount rates will be posted in the BSP website for appropriate guidance by the banks.
Source: Bangko Sentral ng Pilipinas