The Bangko Sentral ng Pilipinas (BSP) believes that it sees no urgency to change its monetary policy stance, citing the country’s strong macroeconomic fundamentals and benign inflation.
“There’s no urgency for a change in policy coming from that end because inflation continues to be well undercontrol,” BSP Governor Amando Tetangco Jr. said on the sidelines of the 10th Awards Ceremony and Appreciation Lunch for BSP Stakeholders in the National Capital Region.
Tetangco noted that the country’s inflation rate continue to be benign as it averaged 2.9 percent in the first semester.
He added that the inflation rate is also lightly below the lower end of the 3-percent to 5-percent inflation target range.
“As you know, inflation targeting is an inflation-intensive approach so while inflation is benign, we also need to look at other sources of pressures. Not now, not necessarily now, but maybe in the future so we have to make an assessment of that. Inflation targeting is also forward looking,” he said.
The BSP governor also assured the public that the central bank will continue to monitor external developments.
“Of course we will look at other related variables, other related indicators such as what is happening in the advance economies—the United States, Europe and Japan,” he said.
Tetangco added that the BSP will look into the advanced economies to assess if these will eventually have an effect on the developments in the Philippines.
“You’ve already seen that changes in policy, even only planned changes of policy, let’s say in the US can have significant impact on financial markets around the world including the Philippines,” he said.
The Monetary Board has kept the interest rates for the overnight borrowing or reverse repurchase facility is at 3.5 percent, while overnight lending or repurchase is at 5.5 percent. The reserve requirement ratios were held steady as well.
It has also kept the interest rates on the special deposit accounts (SDA) at 2 percent. It also reduced the SDA rate three times since January by a total of 150 basis points.
The BSP is also scheduled to announce its latest monetary policy stance on July 25.