MANILA – The Bangko Sentral ng Pilipinas (BSP) on Thursday kept anew its key policy rates to further allow earlier rate reductions to work their way into the economy.
The overnight reverse repurchase (RRP) facility rate remains at 2.25 percent, the overnight repurchase (RP) rate is at 2.75 percent, and the overnight deposit rate at 1.75 percent.
In a briefing aired over the central bank’s Facebook page, BSP Governor Benjamin Diokno said the Board still considers the current policy stance to be appropriate since inflation is expected to stay within the government’s 2 to 4-percent target band, among others.
“The balance of risks to the inflation outlook also continues to lean toward the downside from 2020 until 2022 owing largely to the risk of potential disruptions to domestic and global economic activity amid the ongoing pandemic,” he said.
The Board cut its 2020 average inflation forecast from 2.6 percent to 2.3 percent.
The 2021 projection was also slashed from 3 percent to 2.8 percent, and the 2022 forecast from 3.1 percent to 3 percent.
Diokno said the Board also noted that economic activities around the globe have stabilized but uncertainty remains given the impact of the pandemic, with some countries posting upticks in the number of infections.
He, however, said signs of recovery continue to show as the economy re-opens “supported by ample liquidity in the financial system.”
With these factors, Diokno said the Board “is of the view that a continued pause will allow prior measures by the BSP to further work their way through the economy.”
“The gradual easing of restrictions, along with sustained efforts by the government to protect human health and livelihood, should also help lift market sentiment and aid the recovery of the economy in succeeding months. Looking ahead, the BSP stands ready to deploy its full arsenal of instruments as needed in fulfillment of its mandate to maintain price and financial stability conducive to sustainable economic growth,” he added. (PNA)
