Philippines Leaves Key Rate Steady at 4%

The central bank of Philippines left its benchmark overnight borrowing rate on hold at 4 percent for the eleventh straight meeting on February 11th, 2016 as widely expected, saying manageable inflation and robust growth conditions continue to support steady monetary policy settings. It also kept the short-term special deposit accounts (SDAs) facility rate at 2.5 percent and the overnight repo rate at 6 percent.
Bangko Sentral NG Pilipinas | Joana Taborda | 2/11/2016 9:27:40 AM
The interest rates on term RRPs, RPs and special deposit accounts (SDA) were also kept steady and the reserve requirement ratios were left unchanged.

Statement by the Bangko Sentral NG Pilipinas:

The Monetary Board’s assessment of manageable inflation dynamics and robust growth conditions continue to support steady monetary policy settings.  Average inflation is projected to settle within the target range of 3.0 percent ± 1 percentage point for 2016-2017, while inflation expectations remain firmly anchored within the inflation target band over the policy horizon.  The Monetary Board also noted that the risks surrounding the inflation outlook have shifted slightly to the downside. Downward pressures on inflation could arise from slower-than-expected global economic activity and potential second-round effects from lower international oil prices, while upside risks could come from the impact of prolonged 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 are likely to stay firm, supported by solid private household and capital spending, buoyant market sentiment, and adequate domestic liquidity. The Monetary Board also considered that the lingering uncertainty over economic growth prospects across the globe could continue to drive volatility in global financial markets.

Going forward, the Monetary Board affirmed the continuing need for vigilance over domestic and external developments to ensure that the monetary policy stance remains in line with price and financial stability.

Philippines Leaves Key Rate Steady at 4%