BSP keeps policy rates anew

By Joann Santiago

MANILA, Dec. 17 (PNA) — Philippine monetary officials on Thursday maintained the Bangko Sentral ng Pilipinas’ (BSP) key rates after noting that inflation dynamics and risks to the outlook remain firm and domestic demand continue to be strong.

In a press briefing, BSP Governor Amando Tetangco Jr. said the central bank’s overnight borrowing or reverse repurchase (RRP) rate remain at four percent and the overnight lending or repurchase (RP) rate is at six percent.

He said inflation forecast for 2015 was seen to stay below the government’s two to four percent target but was seen to go up to within target levels in the next two years due to the impact of the dry season.

The central bank’s Monetary Board (MB) maintained its 2015 average forecast at 1.4 percent.

It, however, hiked the 2016-17 forecasts to 2.4 percent and 3.2 percent from 2.3 percent and 2.9 percent during the Board’s meeting last November.

The government’s inflation target for 2015-18 is a range between two to four percent.

The projection of higher but within-target inflation rate in the next two years was due to the impact of the extended El Nino phenomenon and pending power rate hikes, Tetangco said.

He also said that domestic demand conditions remained strong and “is likely to stay firm, supported by solid private household and capital spending, buoyant market sentiment, and adequate domestic liquidity.”

He said the impact on global financial condition of the Federal Reserve’s decision to increase key rates by 25 basis points this week was also considered.

He said this was made as the Board noted that “keeping monetary policy settings steady at this juncture would allow the BSP some room to continue to assess evolving global economic conditions and calibrate its policy tools as appropriate.”

With these factors, the Board “believes that prevailing monetary policy settings are appropriate given the outlook for inflation and domestic activity.”

“Going forward, the BSP will continue to monitor domestic and external developments to ensure that the monetary policy stance remains in line with price and financial stability,” he added. (PNA)