Overnight repurchase facility kept at 2.0 percent
BSP maintains interest rates
MANILA – The Monetary Board, in its meeting on monetary policy today opted to maintain the interest rate on BSP’s overnight reverse repurchase facility at 2.0 percent.
In a statement released Thursday afternoon, the BSP said the interest rates on the overnight deposit and lending facilities were kept at 1.5 percent and 2.5 percent, respectively.
The Monetary Board said that inflation is likely to remain elevated in the coming months, reflecting the impact of supply constraints on domestic prices of key food commodities including meat and vegetables as well as the recent uptick in international oil prices.
The latest baseline projections show inflation returning to within the target range of 2-4 percent over the policy horizon as supply-side influences subside. The Monetary Board also noted that inflation expectations continue to be anchored within the inflation target band.
According to the BSP statement, the balance of risks to the inflation outlook appears broadly balanced around the baseline path in 2021 but is believed to continue leaning toward the downside in 2022. Tighter supply of meat products due in part to the African Swine Fever outbreak in the Philippines could lend further upside pressures on inflation. However, the BSP said the ongoing pandemic may continue to pose downside risks to demand and to the inflation outlook.
“While recent indicators of activity and sentiment have shown some improvement, the emergency of new variants of the virus and possible delays in mass vaccination programs continue to temper prospects for economy recovery and growth,” the BSP statement revealed.
The Monetary Board believes that the manageable inflation outlook continues to allow the BSP to maintain an accommodative policy stance and thus complement crucial fiscal policy measures in supporting economic activity and market confidence. The Monetary Board said they support urgent and coordinated efforts with government agencies in implementing non-monetary interventions to enable all Filipinos access to internationally competitively priced food and thereby mitigate the impact of supply-side factors on inflation.
The BSP remains confident their appropriate measures to ensure that the monetary policy stance continues to support the recovery of the economy, in accordance with its price and financial stability mandate. (Melo M. Acuña)