The current key policy rates of the Bangko Sentral ng Pilipinas (BSP) were left unchanged based on the Monetary Board’s assessment of manageable inflation.
In a press briefing on Thursday, BSP Governor Amando Tetangco Jr. said that interest rates for the overnight borrowing or reverse repurchase (RRP) facility remains at 3.5 percent. Overnight lending or repurchase facility was retained at 5.5 percent, while the reserve requirement ratios were kept steady as well.
The central bank has kept its key policy rates since October 25, 2012, wherein it reduced the interest rate for the RRP facility from 3.75 percent to 3.5 percent.
Furthermore, the interest rates on the special deposit account (SDA) facility were left unchanged at 2 percent. Since January, BSP slashed the interest rates for SDAs by a total of 150 basis points.
“The Monetary Board’s decision is based in its assessment that the inflation environment remains manageable,” Tetangco said.
He added that despite the higher inflation rate in January, latest baseline forecast continue to indicate that the future inflation path is likely to stay within its 3-percent to 5-percent target range for 2014, as well as the 2-percent to 4-percent range for 2015.
“Meanwhile, market expectations remain anchored to the inflation target over the policy horizon,” he added.
Furthermore, the BSP governor said that the Monetary Board noted that the balance of risks to the inflation outlook remains slightly weighted toward the upside, given the pending petitions for adjustments in utility rates and the possible uptick in food prices.
Tetangco added that the country’s domestic economic activity is likely to stay firm despite the “more challenging” global economy on the account of heightened financial market uncertainty, following monetary policy adjustments in the United States and generalized concerns about the sustainability of growth in emerging economies like the Philippines.
“Sound fundamentals such as buoyant demand, strong fiscal and external positions as well as favorable consumer and business sentiment would support the economy,” he said.
“The Monetary Board will continue to closely monitor and assess evolving growth and liquidity conditions and will consider policy adjustments, when needed, to ensure continued price and financial stability,” Tetangco added.