Bangko Sentral leaves policy rates untouched at record lows

(Updated 5:21 p.m.) The Monetary Board on Thursday kept the benchmark interest rates unchanged at all-time lows.

 

At a press briefing, Bangko Sentral ng Pilipinas Governor Amando Tetangco Jr. said monetary authorities decided to keep policy rates—or yield benchmarks on bank loans—untouched at record lows of 3.5 percent for overnight borrowing and 5.5 percent for overnight lending.

 

Tetangco also said monetary authorities decided to keep yields of special deposit accounts (SDA) at 2 percent. 

 

Yields for the SDA window, which is used to manage liquidity, were already cut thrice since January.

 

A higher yield against other investment instruments mops up liquidity in the financial system, while a lower rate flushes money out into the economy.

 

“The BSP is of the view that manageable inflation outlook and robust domestic demand provide scope to keep policy settings steady for the time being,” Tetangco said. 

 

“Keeping policy settings steady allows time to assess the impact of recent fine-tuning in monetary operations,” he added. 

 

In May, the Bangko Sentral also limited the types of funds banks can deposit in the SDA window.

 

Consumer prices were largely unchanged at 2.6 percent in May, pulling the year-to-date inflation to 3 percent or at the lower end of the central bank’s 3 to 5 percent target. 

 

Economic growth was at 7.8 percent in the first quarter, the fastest in Asia.  — VS, GMA News