BSP keeps key rates steady after policy settings remain appropriate

Bangko Sentral ng Pilipinas' (BSP) policy-making Monetary Board (MB) on Thursday maintained anew the central bank's key policy rate after noting that inflation and balance of risks on inflation along with growth dynamics remain favorable.

In a briefing, BSP Governor Amando Tetangco Jr. said the overnight reverse repurchase (RRP)

RATE IS STILL AT THREE PERCENT.

RATES OF OTHER OVERNIGHT LENDING AND DEPOSIT FACILITIES WERE ALSO KEPT STEADY. THESE HAVE BEEN IN PLACE SINCE MAY THIS YEAR.

TETANGCO SAID INFLATION WAS SEEN TO END 2016 BELOW THE GOVERNMENT'S TWO TO FOUR PERCENT TARGET BUT IT WAS EXPECTED TO GO UP TO WITHIN TARGET LEVELS UNTIL 2020.

HE, HOWEVER, SAID BALANCE OF RISKS ON INFLATION WAS TILTED ON THE UPSIDE, GIVEN THE RISE IN OIL PRICES, THE PENDING ADJUSTMENTS ON DOMESTIC ELECTRICITY RATES AND THE IMPACT OF POSSIBLE APPROVAL OF A PENDING BILL ON EXCISE TAX HIKES.

"INCREASED UNCERTAINTY IN GLOBAL ECONOMIC PROSPECTS, MEANWHILE, CONTINUES TO POSE A KEY DOWNSIDE RISK TO THE INFLATION OUTLOOK. NEVERTHELESS, INFLATION EXPECTATION REMAIN BROADLY CONSISTENT WITH THE INFLATION TARGET OVER THE POLICY HORIZON," HE SAID.

TETANGCO SAID THE BOARD BELIEVES THAT DOMESTIC EXPANSION WOULD REMAIN FIRM AS IT CONTINUED TO BE BACKED BY SOLID PRIVATE HOUSEHOLD SPENDING, HIGHER GOVERNMENT SPENDING, AND ADEQUATE DOMESTIC LIQUIDITY.

HE EXPLAINED THAT IMPACT OF THE ONGOING ADJUSTMENT IN THE US FEDERAL RESERVE RATE WAS ALSO CONSIDERED DURING THE BOARD'S MEETING THURSDAY.

"THE MONETARY BOARD ALSO NOTED THAT MAINTAINING MONETARY POLICY SETTINGS AT THIS JUNCTURE WILL GIVE THE BSP MORE TIME TO ASSESS EVOLVING ECONOMIC DEVELOPMENTS AND CALIBRATE ITS POLICY TOOLS AS APPROPRIATE," HE SAID.

"WITH THESE CONSIDERATIONS, THE MONETARY BOARD BELIEVES THAT PREVAILING MONETARY POLICY SETTINGS REMAIN APPROPRIATE. GOING FORWARD, THE BSP WILL CONTINUE TO MONITOR EMERGING PRICE AND OUTPUT CONDITIONS TO ENSURE PRICE AND FINANCIAL STABILITY CONDUCIVE TO SUSTAINED ECONOMIC GROWTH," HE ADDED.

Source: Philippines News Agency