MANILA, June 13 (PNA) — Finance Undersecretary Gil Beltran expects domestic interest rates to remain in a seesaw situation until the Federal Reserve’s stimulus program is eventually pulled out.
”I’m sure it is going up and down until the United States finishes the QE (quantitative easing) tapering,” the Department of Finance (DOF) chief economist said.
Since December 2013, the Federal Open Market Committee (FOMC) slashed a total of USD 40 billion off the USD 85 billion stimulus program as the US economy churns in more positive developments.
Analysts expect the stimulus program to be fully withdrawn by end-2013 and after which the expectations of increase in Fed’s key rates in the middle of 2015.
To date, the Fed’s key rate is at zero to 0.25 points. These were maintained since December 2008 on the onset of the recent global economic crunch.
The drop in interest rates in the US was felt in the Philippines as shown by the rate of the government’s three-month Treasury bills (T-bills), which banks use as benchmark rate for their loans.
For one, the rate of the 91-day T-bill went down to record-low of 0.001 percent in November 2013 due in part to high liquidity situation domestically and the low-interest rate environment not only in the country but around the globe.
Domestic interest rates have since corrected with the rate of the said T-bill tenor averaging at 1.035 percent during the auction last June 2. (PNA)