BSP holds rates; cuts inflation forecast

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The Philippine central bank’s Monetary Board decided on Thursday to keep its key interest rates steady, with “manageable” price trends prompting a downward revision to its inflation outlook for 2017.

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“The Monetary Board’s decision is based on its assessment that the outlook for inflation continues to be manageable,” Bangko Sentral ng Pilipines (BSP) Governor Amando Tetangco Jr. told reporters after the Monetary Board policy meeting on Thursday.

The board lowered its inflation forecast for the year to 3.1 percent from the previous outlook of 3.4 percent. It kept the 3 percent forecast for 2018, and announced a 3 percent projection for 2019.

At Thursday’s policy meeting, the board also decided to keep the reverse repurchase (RRP) facility rate at 3 percent.

The corresponding rates for overnight lending and deposit facilities also remained unchanged at 3.5 percent and 2.5 percent, respectively, along with the reserve requirement ratio (RRR), which stood steady at 20 percent.

Tetangco is set to retire on July 3, with BSP Deputy Governor Nestor Espenilla Jr. replacing him as governor on July 4.

Since lowering the reverse repurchase rate to 3 percent from 4 percent in the run-up to adopting an interest rate corridor system on June 3, 2016, the central bank has kept the policy rate unchanged.

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