Bangko Sentral keeps policy rates unchanged
The central bank kept policy rates unchanged on Thursday, citing moderate inflation outlook over the near term.
The policy-setting Monetary Board retained 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 Monetary Board’s decision is based on its assessment that while latest baseline forecasts show higher inflation outturns for 2018, the inflation path is expected to moderate and settle within the inflation target range of 3.0 percent plus-minus 1.0 percentage point,” Bangko Sentral ng Pilipinas Gov. Nestor Espenilla Jr. said in statement read by Managing Director Francisco Dakila Jr. during a press conference at the BSP Headquarters in Manila City.
The BSP also kept the reserve requirement ratio (RRR)—said to be among the highest in Asia and the world—unchanged at 20 percent.
“The discussion with regards to reserve requirement is a continuing issue so the focus now is on the policy rate,” Espenilla noted.
The BSP said earlier it wanted to lower the RRR to single-digit level.
The next BSP policy meeting is on March 22.
Inflation in January came in at 4.0 percent, the highest in more than three years. It was also the ceiling of the BSP’s 2.0 to 4.0-percent target for the full-year 2018.
In the same briefing, Dakila said the BSP adjusted its inflation outlook to 4.3 percent in 2018 and 3.5 percent in 2019.
“The Monetary Board observed that the risks to the inflation outlook remain weighted toward the upside owing mainly to price pressures emanating from possible further increases in global prices,” he said.
The latest inflation outlook was influenced by the Tax Reform for Acceleration and Inclusion (TRAIN) law which took effect on Jan. 1, 2018.
First Metro Investment Corp. earlier said the BSP is expected to raise policy rates twice this year.
The last time the Monetary Board raised interest rates was on Sept. 11, 2014. It introduced procedural cuts in June 2016 as part of the shift to an interest rate corridor scheme. —VDS, GMA News