BSP keeps policy rates unchanged

The Bangko Sentral ng Pilipinas (BSP) kept key rates steady on Thursday when the policy-setting Monetary Board met for the first time led by BSP Governor Nestor A. Espenilla Jr.

Inflation is expected stay manageable within the policy horizon.

The board retained the overnight lending rate at 3.5 percent, the overnight borrowing rate at 3.0 percent, and the overnight deposit rate at 2.5 percent.

The reserve requirement ratio — supposedly among the highest in Asia — was likewise left unchanged at 20 percent.

"The Monetary Board's decision is based on its assessment that the inflation environment remains manageable," Espenilla said in a briefing after the policy meeting in Manila City.

In June Singapore-based DBS Group Research said it expected the BSP to raise rates this August and be the first Association of Southeast Asian Nations (ASEAN) member to do so.

The International Monetary Fund (IMF) said earlier this week there was no urgent need for the BSP to tweak its policy stance.

Inflation target revised

In the same briefing, BSP Deputy Governor Diwa C. Guinigundo said the MB adopted a slightly faster inflation outlook.

The board now expects inflation to clock in at 3.2 percent from 3.1 percent previously, due to "the increase in domestic petroleum prices."

The MB also upgraded their inflation outlook for 2018 to 3.2-percent from 3.0 percent, and 3.1 percent in 2019 from the previous 3.0 percent.

"The Monetary Board also recognizes that the balance of risks to the inflation outlook continues to be on the upside," Espenilla said.

"While the proposed tax reform program may exert potential transitory pressures on prices, various social safety nets and the resulting improvement in productivity will likely temper the impact on inflation over the medium term," he added. — VDS, GMA News