BSP keeps key interest rate unchanged at 3 percent

The Bangko Sentral ng Pilipinas (BSP) on Thursday decided to keep policy rates unchanged.

During the meeting of the policy-setting Monetary Board, the overnight borrowing rate was left steady at 3 percent. The overnight lending rate was also untouched at 3.5 percent.

It also kept the special deposit accounts (SDA) rate at 2.5 percent, and the reserve requirement ratio at 20 percent.

"The Monetary Board's decision is based on its assessment of manageable inflation," BSP Governor Amando M. Tetangco, Jr. said in a briefing in Manila City.

A recent Reuters poll indicated that the central bank is widely expected to leave its policy rates unchanged for the first half.

The BSP maintained the 2018 inflation outlook at 3.0 percent. "We took into account the uptick in inflation in March and in April and this contributed to an upward adjustment in the inflation forecast," said Francisco Dakila Jr., managing director for Monetary Policy Sub-Sector, said.

"However, during the same period of time there was a reduction in oil prices because of the lower outlook for Dubai crude," he added.

Dakila noted Dubai crude is seen at $51.32 per barrel, compared with previous market-based assumptions of $51.94.

Assumptions for 2018 prices have also been lowered to $51.03 per barrel from $51.55 per barrel.

Thursday's meeting is the penultimate for the Monetary Board with Tetangco as chair. He is due, but his term still covers the next Monetary Board meeting in June.

Deputy Governor Nestor A. Espenilla, Jr., who currently heads the central bank's Supervision and Examination Sector, is succeeding Tetangco. — VDS, GMA News