Latest Stories

BSP seen to maintain key rates at record lows


Monetary authorities are expected to keep interest rates at record lows until the middle of next year.

Financial giant Australia and New Zealand Banking Group Ltd. (ANZ) said that, despite the country’s healthy growth, inflation remains modest, giving the Bangko Sentral ng Pilipinas (BSP) scope to hold policy rates and keep borrowing costs down.

“We maintain our call for the BSP to hold its policy overnight borrowing rate at 3.50 percent through the first half of 2014,” ANZ said in a research note this week. “With 12-month average inflation at 3.1 percent year-on-year as of July, the scope to hike rates has declined.”

The BSP’s overnight borrowing and lending rates currently stand at record lows of 3.5 and 5.5 percent.

Yields for special deposit accounts (SDA) are also at a record low of 2 percent across all maturities.

The BSP’s next policy stance meeting will be on Thursday next week.

Low policy rates help encourage economic activity by influencing banks to lower the cost of funds for businesses and consumers. Conversely, higher policy rates restrict economic activity, which keeps consumer prices from rising to the point of choking the economy.

According to ANZ, the BSP may hike rates by the second half, starting with a 25 basis-point increase in overnight borrowing and lending rates. The BSP recently noted a surge in the growth of domestic liquidity or M3.

M3 growth reached 20.3 percent in June—the fastest rate in six years.

ANZ said that, with domestic liquidity “swelling,” the rate of price increases may start to accelerate by next year.

The government is scheduled to release inflation data for August this week.

Last week, the BSP said inflation likely settled between 1.9 percent and 2.7 percent for the month as lower power prices offset the effects of the higher cost of fuel due to a weaker peso.

Follow Us

Follow us on Facebook Follow on Twitter Follow on Twitter

Recent Stories:

Complete stories on our Digital Edition newsstand for tablets, netbooks and mobile phones; 14-issue free trial. About to step out? Get breaking alerts on your mobile.phone. Text ON INQ BREAKING to 4467, for Globe, Smart and Sun subscribers in the Philippines.

Tags: BSP , Business , Interest Rates

  • eight_log

    A very good move …. high interest rates only dampen economic activity. Walang nakikinabang sa mataas na intertest kung hindi ang mga bangko lamang … even that is questionable … because high interest rates put pressure on thier NPLs. A buoyant economy is more conducive and this, low interest rates will bring about!!!!

Copyright © 2014, .
To subscribe to the Philippine Daily Inquirer newspaper in the Philippines, call +63 2 896-6000 for Metro Manila and Metro Cebu or email your subscription request here.
Factual errors? Contact the Philippine Daily Inquirer's day desk. Believe this article violates journalistic ethics? Contact the Inquirer's Reader's Advocate. Or write The Readers' Advocate:
c/o Philippine Daily Inquirer Chino Roces Avenue corner Yague and Mascardo Streets, Makati City, Metro Manila, Philippines Or fax nos. +63 2 8974793 to 94


  • Suspect in Vhong Navarro’s mauling wants to turn state witness – De Lima
  • Why are Americans obsessed with missing plane?
  • Napoles to have surgery on Tuesday – report
  • Mayor’s assassination linked to black sand mining controversy
  • Initial batch of Etihad passengers tested negative for MERS-CoV
  • Sports

  • PBA D-League: Waves edge skidding Superchargers
  • Ilad’s last-second basket lifts Gems over Bakers
  • Reigning champs Miami open playoffs with win
  • Spurs subdue Mavericks in playoff opener
  • Wawrinka beats Federer to win Monte Carlo Masters
  • Lifestyle

  • Miss America: Don’t suspend teen over prom invite
  • Transitions and resurrection in the performing arts
  • ‘Archaeology tour’ of Cebu’s heritage of faith
  • Historic Fort Bonifacio tunnel converted into a septic tank
  • ‘Imports’ from London, and play of the year
  • Entertainment

  • Arrest warrants out vs. Deniece Cornejo, Cedric Lee, et al over serious illegal detention
  • Lindsay Lohan says she had a miscarriage
  • Discovery network cancels Everest jump
  • ‘Captain America’ stays strong atop US box office
  • Easter musings
  • Business

  • Century Pacific Food sets IPO price at P13.75 per share
  • Oil prices down in quiet Asian trade
  • Asian shares mixed in holiday-thinned trade
  • BDO seen keen on bidding for Cocobank
  • Bataan freeport investment pledges up 1,302%
  • Technology

  • PH has slowest internet in Southeast Asia
  • Nintendo’s trailblazing Game Boy marks 25th anniversary
  • Nasa’s moon-orbiting robot crashes down
  • Netizens pay respects to Gabriel Garcia Marquez
  • Nokia recalls 30,000 chargers for Lumia 2520 tablet
  • Opinion

  • Gigi’s home
  • Palace stonewalls on MRT inquiry
  • Couple of things too
  • There is plenty of water behind Wawa Dam
  • Triduum thoughts of a young boy
  • Global Nation

  • Filipinos in Middle East urged not to panic amid MERS-CoV scare
  • Obama on mission to quiet Asia skeptics
  • Search for Etihad passengers launched
  • Japan presents $57-B ‘dream plan’ to solve Metro congestion
  • Tim Tebow’s charity hospital in Davao seen to open in 7 months
  • Marketplace