Monetary Board Holds Monetary Policy Settings Steady

Manila—(PHStocks)—Bangko Sentral ng Pilipinas (BSP)—The Monetary Board decided to maintain the BSP’s key policy rates at 4.0 percent for the overnight borrowing or reverse repurchase (RRP) facility and 6.0 percent for the overnight lending or repurchase (RP) facility.  The interest rates on term RRPs, RPs and special deposit accounts (SDA) were also kept steady. The reserve requirement ratios were likewise left unchanged.

The Monetary Board’s assessment of manageable inflation outlook and robust growth conditions continue to support keeping monetary policy settings unchanged. Latest forecasts indicate that average inflation is likely to settle within the target range of 3.0 percent ± 1 percentage point for 2016-2017, while inflation expectations continue to be firmly anchored within the inflation target band over the policy horizon.  The Monetary Board also noted that the risks surrounding the inflation outlook have remained tilted to the downside, as downward price pressures could arise from slower-than-expected global economic activity and potential second-round effects from lower international oil prices. Meanwhile, upside risks to the inflation outlook persist, particularly those that could emanate from the impact of El Niño dry weather conditions on food prices and utility rates as well as pending petitions for power rate adjustments.

At the same time, the Monetary Board observed that domestic demand conditions continue to be buoyant, supported by solid private household and capital spending, positive business sentiment, and adequate credit and domestic liquidity. The Monetary Board also recognized that uncertainty over economic growth prospects across the globe could continue to drive volatility in global financial markets in the months ahead.

Given these considerations, the Monetary Board affirmed the need to keep a watchful eye over domestic and external developments to ensure that the monetary policy stance remains in line with the BSP’s price and financial stability objectives.

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