Philippine central bank maintains interest rate at 2 pct
Source: Xinhua | 2020-12-18
The Philippine central bank on Thursday decided to maintain the interest rate on the overnight reverse repurchase facility at 2.0 percent.
The Bangko Sentral ng Pilipinas (BSP) said that the interest rates on the overnight deposit and lending facilities were likewise kept at 1.5 percent and 2.5 percent, respectively.
BSP Governor Benjamin Diokno said the monetary board's decision was based on its assessment that the inflation environment remains benign, the BSP said.
He said the latest baseline forecasts have risen slightly due to the sharp increase in global crude oil prices and the higher-than-expected food inflation in November.
However, since the rise in food prices is transitory, he said it is expected that the future inflation path will remain firmly within the government's 2 to 4 percent target over the policy horizon.
"The balance of risks to the inflation outlook also leans toward the downside from 2020 to 2022 owing largely to potential disruptions to domestic and global economic activity amid the ongoing pandemic," Diokno said in a virtual briefing.
Meanwhile, he said the inflation expectations remain broadly consistent with the inflation target.
He said the board noted that the resurgence of COVID-19 cases globally has tempered economic activity with the reimposition of preventive measures in recent weeks.
However, he said that optimism over the delivery of vaccines has lifted market confidence, supporting improved prospects for global growth.
On the domestic front, he said the board also observed early indications of improved mobility and sentiment.
"While recent natural calamities could pose strong headwinds to growth, the further easing of quarantine measures should help facilitate the recovery of the economy in the coming months," he said.
"Given these considerations, the Monetary Board is of the view that monetary policy settings remain appropriate," Diokno said.
He said the board believes that an accommodative monetary policy stance, together with sustained fiscal initiatives to ensure public welfare, should quicken the economy's transition toward a sustainable recovery.
The Philippines now has 454,447 confirmed COVID-19 cases, including 8,850 deaths.
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