Bangko Sentral keeps policy rates steady

The Bangko Sentral ng Pilipinas (BSP) on Thursday kept interest rates steady, banking on inflation to stay manageable within the policy horizon.

In line with market expectations, the policy-setting Monetary Board (MB) decided to retain the overnight lending rate at 3.5 percent, the overnight reverse repurchase rate at 3.0 percent, and the overnight deposit rate at 2.5 percent.

It also kept the reserve requirement ratios at 20 percent.

"The Monetary Board's decision is based on its assessment that the inflation environment continues to be manageable," BSP Governor Amando M. Tetangco Jr. said in a briefing immediately after the policy-setting meeting, the last under his leadership.

Tetangco is scheduled to retire on July 2, and is set to be succeeded by Deputy Governor Nestor A. Espenilla Jr., who currently heads the central bank's Supervision and Examination Sector.

In its latest policy meeting, the Monetary Board downgraded its inflation outlook to 3.1 percent from 3.4 percent.

"Liquidity and credit conditions continue to provide support to economic growth as well as stability of consumer prices," Deputy Governor Diwa C. Guinigundo said.

Guinigundo said the MB also retained its 2018 inflation outlook of 3.0 percent, and adopted a 3.0-percent outlook in 2019.

"The long-run effects on productivity will improve overall supply and further dampen inflation," Tetangco said.

"Meanwhile, prospects for the global economy have improved, but risks remain tilted to the downside," he added.

According to Singapore-based DBS Group Research, the BSP is expected to raise rates in August, the first Association of Southeast Asian Nations (ASEAN) member to do so. — VDS/BM, GMA News