Philippines Leaves Monetary Policy on Hold

Philippines’ central bank left its key policy rate on hold at 4 percent in February as expected, saying inflation expectations have moderated.
Bangko Sentral NG Pilipinas | Joana Taborda | 2/12/2015 9:13:35 AM
Statement by the Bangko Sentral NG Pilipinas:

At its meeting today, 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 left unchanged as well.

The Monetary Board’s decision is based on its assessment that prevailing monetary policy settings remain appropriate. Latest baseline forecasts show a lower inflation path within the target range of 3.0 percent ± 1 percentage point for both 2015 and 2016, while inflation expectations remain firmly anchored. Inflation pressures have moderated further since the previous monetary policy meeting, reflecting mainly the significant decline in international oil prices. At the same time, the Monetary Board observed that prospects for domestic activity continue to be firm, and positive growth dynamics are expected to be supported by buoyant private demand, sustained bank lending growth, and upbeat business sentiment.

The Monetary Board also noted that the risks to the baseline inflation forecast remain broadly balanced, with potential price pressures emanating from pending petitions for adjustments in utility rates and possible power shortages. Meanwhile, downside risks could arise from possible slower-than-expected global economic activity.

Given these considerations, the Monetary Board is of the view that the within-target inflation outlook and robust domestic growth support keeping policy settings steady. Going forward, the BSP will continue to monitor developments affecting the inflation outlook to ensure that the monetary policy stance remains consistent with its price and financial stability objectives. 

Philippines Leaves Monetary Policy on Hold