BSP Governor Amando M. Tetangco, Jr. Photo by MIKE MOROSO
MANILA, Philippines – The Bangko Sentral ng Pilipinas (BSP) kept its key policy rates steady as inflation is expected to continue to be manageable this year until the next.
BSP Governor Amando M. Tetangco Jr. said in a briefing the overnight borrowing and overnight lending rates were maintained at four percent and six percent, respectively.
The interest rates on the reverse repurchase, repurchase, and the special deposit account facility and the reserve requirement ratios were also kept on hold.
“The Monetary Board’s decision is based on its assessment that prevailing monetary policy settings remain appropriate. Latest baseline forecasts show a lower inflation path… while inflation expectations remain firmly anchored,” Tetangco said.
“Inflation pressures have moderated further since the previous monetary policy meeting, reflecting mainly the significant decline in international oil prices,” he added.
“At the same time, the Monetary Board observed that prospects for domestic activity continue to be firm, and positive growth dynamics are expected to be supported by buoyant private demand, sustained bank lending growth, and upbeat business sentiment,” Tetangco further said.
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Inflation is forecast to average 2.3 percent this year, lower than the BSP’s December estimate of three percent. The central bank also lowered its 2016 projection for average inflation to 2.5 percent from 2.6 percent.
All projections are within the government and BSP’s two to four percent target range for this year until 2016.
Tetangco recounted that the BSP sees broadly balanced risks to inflation, with upside price pressures coming from pending adjustments in utility rates and possible power shortage this year.
Downside risks, meanwhile, are seen coming from the slower-than-expected world economic output, he said.
“Given these considerations, the Monetary Board is of the view that the within-target inflation outlook and robust domestic growth support keeping policy settings steady,” Tetangco said.
“Going forward, the BSP will continue to monitor developments affecting the inflation outlook to ensure that the monetary policy stance remains consistent with its price and financial stability objectives,” he said.
