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Philippines keeps key rates unchanged given ‘manageable’ inflation
By Marisa Wong
Madison, Wis., Dec. 11 – The Monetary Board of the Bangko Sentral ng Pilipinas decided to keep its key policy rates unchanged at its meeting on Thursday.
The overnight borrowing rate remains at 4%, and the overnight lending rate has been kept at 6%, according to a bank notice.
The bank had raised the rates by 25 basis points in September, as previously reported.
The interest rates on term reverse repurchase facilities, repurchase facilities and special deposit accounts were also kept steady. The reserve requirement ratios were left unchanged as well.
The board’s decision is based on its assessment that the inflation environment continues to be more manageable, with the risks to the inflation outlook remaining broadly balanced over the policy horizon.
Latest baseline forecasts show a lower inflation path for 2014 to 2016 relative to the previous policy meeting, reflecting in large part the subdued outlook for global commodity prices, the bank said.
Inflation expectations are also generally lower and remain aligned to the inflation target.
Meanwhile, output growth moderated in the third quarter as agricultural production contracted amid unfavorable weather conditions and as public spending slowed down.
The board also noted that while global economic conditions remain challenging, prospects for domestic activity continue to be firm, supported by strong domestic demand, robust bank lending growth and buoyant business sentiment.
In sum, the board said it believes that prevailing monetary policy settings remain appropriate given the manageable inflation outlook and favorable domestic growth prospects.
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