The Monetary Board, the policy-making body of Bangko Sentral ng Pilipinas, on Thursday kept the benchmark interest rates steady despite the action of the US Federal Reserve to increase borrowing cost.
Bangko Sentral Governor Amando Tetangco Jr. said in a news briefing the interest rates of 3.5 percent for overnight lending, 3 percent for overnight borrowing and 2.5 percent for overnight deposits were left unchanged. The reserve requirement ratios were also maintained.
“The Monetary Board’s decision is based on its assessment of inflation dynamics and the risks to the inflation outlook over the policy horizon,” Tetangco said.
“Latest baseline forecasts indicate that average inflation would likely settle below the target range of 2 to 4 percent for 2016. However, inflation is seen to return gradually to a path consistent with the inflation target in 2017 to 2018 due to higher oil prices and strong domestic economic activity,” Tetangco said.
He said the overall balance of risks surrounding the inflation outlook also remained tilted to the upside, owing partly to the pending petitions for adjustments in electricity rates as well as the initial impact of the government’s broad fiscal reform program.
Bangko Sentral Deputy Governor Diwa Guinigundo said the board also kept the average inflation forecast this year at 1.8 percent. The average forecast for 2017 was raised to 3.3 percent from 3 percent while the 2018 forecast was adjusted to 3 percent from 2.9 percent.
