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MANILA, Philippines -- Debt yields are seen shackled to a tight range for most of the week because of uncertainty over whether the central bank will cut interest rates on Thursday following a reduction in bank reserve requirements.

About P60 billion flows back into the financial system after the central bank's 2 percentage point cut in regular reserve requirements took effect on Friday.

The move aimed at ensuring market liquidity amid the deepening global credit crisis, dealers said.

Banks are now reviewing where best to put the fresh liquidity, although there was still a preference for putting money into the more liquid short end of the market, traders said Monday.

"Investors are a bit cautious where they will put their money right now," a trader from a local bank said. "Investors are on a wait-and-see."

Some traders argue the cut in reserve requirements will provide enough of a boost to the economy that the central bank can stay its hand on interest rates for now.

But others suggest a rate cut was needed to shore up a slowing economy, especially given rapidly weakening advanced economies. A fall in the inflation rate from a 17-year high also suggests room to ease policy further, they say.

The central bank kept rates steady in October after hiking them 100 basis points over three meetings to tackle quickening inflation. The overnight rate stands at 6.0 percent.

The government plans to sell P6.0 billion ($121 million) worth of 10-year Treasury bonds at an auction on Tuesday. Traders expect the bond to fetch an average rate of 9.0 percent, slightly higher than yields quoted in the secondary market.

• RP raises $1.5B from int’l bond offering
• Shares slide 1.66% lower
• Economic crisis fears return
• Forex reserves as record $37.1B
• RP less vulnerable to crisis, says Fitch
• NFA rice procurement highest since 1979
• Treasurer sees drop in interest rates
• HK fund buys 13% of Alliance Tuna
• Philex reports P800-M output