BSP keeps policy rates unchanged

The Bangko Sentral ng Pilipinas decided to keep policy rates unchanged on Thursday on the premise that inflation will remain manageable, despite the Federal Reserve’s move to hike interest rates.

The policy-setting Monetary Board decided to retain the overnight lending rate at 3.5 percent, the overnight borrowing rate at 3.0 percent, and the overnight deposit rate at 2.5 percent.

The reserve requirement ratio—said to be among the highest in Asia and the world—was likewise left unchanged at 20 percent.

“The Monetary Board’s decision is based on its assessment that the outlook for the inflation environment has been broadly unchanged,” BSP Governor Nestor Espenilla Jr. said in a statement read by Deputy Governor Diwa Guinigundo.

“This is indicated by the latest baseline forecasts remaining within the target range of 3.0 ± 1.0 percentage point,” Espenilla noted.

The BSP expect inflation to settle at 3.2 percent this year, 3.4 percent in 2018, and 3.2 percent in 2019.

The Federal Reserve decided to raise its overnight lending rate by a quarter-percentage point, marking its third hike this year.

“The central bank does not have to match the moves of the US Fed and that is the tightening of monetary policy before the end of the year,” Guinigundo said. — VDS, GMA News