MANILA - The Bangko Sentral ng Pilipinas will adopt a variable-rate format with a pre-determined offer volume in the auction for the overnight reverse repurchase (RRP) facility starting Friday, Sept. 8.

The central bank will also introduce a formal operational target known as the “Overnight (ON) RRP Rate”, which is a short-term, market-determined interest rate that central banks can guide on a day-to-day basis using their monetary instruments to reflect the prevailing monetary policy stance, the BSP earlier said.

In a briefing on Wednesday, BSP Deputy Governor Franciso Dakila Jr. emphasized that the shift is “largely operational” and does not signify a change in monetary policy stance.

“Hindi siya loosening or tightening. Hindi magbabago ang ating inflation target framework. Magbabago lang doon sa way na ginagawa natin ang ating operations kundi malaki ang importance sa efficiency ngo perations at epekto ng operations sa market interest rate. Ine-enhance nito ang implementation ng monetary policy,” Dakila said.

The shift is in line with BSP’s adoption of the Interest Rate Corridor Framework in 2016.

“On a daily basis, babaguhin ang auction volume at ia-announce, ia-adjust para ‘yong resulta ng bidding, malapit sa target. Ang advantage ay makita talaga ang sitwasyo sa market at nalalaman kung masyadong tight ang oeprations or masyadong maluwag,” Dakila said.

Senior Assistant Governor Ma. Ramona Santiago said that the instrument will also give them a glimpse of the investment behavior of banks.

“Sometimes they want to go longer. May preference 7 days, 14 days. Minsan medyo mataas ang bid nila. This will also educate the banks. Kung gusto mong i-tap ang money mo for 1 day, then do not expect na ma-compensate ka ng mataas. Dito matututo ang bangko to manage their liquidity,” Santiago explained.

Dakila added that the adjustments will serve as a guide for banks.

“Sa pricing ng mga bangko sa mga lending nila, makikita ito ‘yong nasa short term, magiging guide ito how to price products ng banks,” Dakila said.

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