BSP takes a break from policy rate tweaks

The Bangko Sentral ng Pilipinas (BSP) on Thursday decided to take a pause in adjusting key policy rates, following three rounds of monetary easing so far this year.

The BSP’s policy-setting Monetary Board (MB) kept rates at current settings with the overnight borrowing rate at 4.00%, the overnight lending at 4.50%, and the overnight deposit rate at 3.50%.

“This is supported by the benign inflation outlook and a firm outlook for domestic economic growth,” BSP officer-in-charge Francisco Dakila Jr. said in a press conference in Manila City.

The BSP expects inflation to settle at 2.4% this year, slower than the previous outlook of 2.5%.

“In the discussion, it was noted that inflation is likely to have bottomed out in October and it will start moving close to midpoint of the target by 2020 to 2021 as base effects start to dissipate,” Dakila noted.

Inflation slowed for the fifth consecutive month to mark a fresh three-year low of 0.8% in October.

For 2020 and 2021, the BSP kept its inflation outlook of 2.9%.

“Upside risks to inflation over the near term emanate mainly from the potential impact of the African Swine Fever outbreak on food prices and from potential volatility in oil prices amid geopolitical tensions in the Middle East,” Dakila noted.

“At the same time, weak global economic prospects continue to temper the inflation outlook, as uncertainty over trade policies weigh down on global economic activity and demand,” he added.

The MB has reduced benchmark interest rates by a total of 75 basis points—25 basis points each during its May 9, August 8, and September 26 meetings. —VDS, GMA News