BSP signals freeze on interest rates

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Current policy supportive of economy – Tetangco
IN a signal that it intends to maintain interest rates following the unexpectedly low third quarter GDP growth rate, the central bank said its current monetary policy stance remains supportive of the Philippine economy.

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“With the inflation outlook generally manageable over the policy horizon, the BSP’s current policy stance should be able to help keep economic activity supported,” Bangko Sentral ng Pilipinas (BSP) Governor Amando Tetangco Jr. said in a text message to reports on Thursday.

Tetangco’s statement followed the official release of third quarter GDP data, which showed that the economy grew at 5.3 percent, significantly below the 6.4 percent growth recorded in the second quarter and the 7 percent in the third quarter of 2013.

Analysts had earlier estimated the third quarter growth rate at between 5.7 percent and 7 percent.

Earlier this week, the central bank said it expected the country’s inflation rate to further moderate as a result of improving supply conditions and lower prices for oil and food.

With the expectation of manageable inflation, the Monetary Board of the BSP at its October 23 meeting maintained its existing rates for overnight borrowing and lending at 4 percent and 6 percent, respectively, as well as the 2.50-percent rate for special deposit accounts (SDA) and the 20-percent reserve requirement ratio (RRR) for banks.

“While [third quarter]GDP surprised on the downside, we expect GDP would continue to be buoyed by private consumption and as the national government clears up spending bottlenecks,” Tetangco concluded.

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