MANILA, Philippines – The Bangko Sentral ng Pilipinas (BSP) kept its key interest rate unchanged on Thursday, with policy makers preferring to retain a cautious stance despite acknowledging that inflation pressures have eased in recent weeks.
In a press briefing after his first rate setting meeting, BSP Governor Benjamin Diokno said the Monetary Board’s decision to keep its overnight reverse repurchase facility unchanged at 4.75 percent was based on the assessment that “prevailing monetary policy settings remain appropriate.”
“Latest baseline inflation forecasts show inflation settling within the target range of 3 percent, plus or minus 1 percentage point for both 2019 and 2020, while inflation expectations continue to stabilize within the target band,” he said.
“Inflation pressures have eased further since the previous monetary policy meeting, reflecting mainly the decline in food prices amid improved supply conditions,” Diokno added.
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The Monetary Board’s decision came as a surprise to some market watchers who had bet on some form of monetary easing — whether though an interest rate cut or a reduction in banks’ reserve requirement — given Diokno’s pro-economic growth bias.
Some analysts, however, continued to predict a central bank easing over the near term despite Thursday’s decision to keep rates steady.
