There were no surprises from the Philippine central bank on Thursday as monetary authorities kept rates on hold, as expected, amid benign inflation and a rosy economic growth outlook.
Officials signaled the Bangko Sentral ng Pilipinas (BSP) would take its time before adjusting the stance of monetary policy, given that risks to the stability of consumer prices seemed well in control.
“Looking ahead, the central bank is unlikely to be in any hurry to adjust interest rates,” think tank Capital Economics said in a note.
On Thursday, the BSP kept its overnight borrowing and lending rates steady at 4 and 6 percent, respectively. The two benchmarks have been at their current levels for over a year. All eight analysts polled by the Inquirer telegraphed the Monetary Board decision.
“Inflation expectations remain anchors within the inflation target band,” BSP Governor Amando M. Tetangco Jr. said in a statement.
The BSP’s mandate is to protect consumers’ purchasing power by keeping prices stable. This is done through adjustments in the cost and amount of money circulating in the economy.
For 2015, the BSP expects inflation to average at 1.4 percent, which is lower than its target of 2 to 4 percent. Officials said chances of the year’s average inflation moving up to reach the target were slim, given record-low prints of 0.4 percent recorded in September and October.
Low inflation this year is a result of cheap commodities, particularly food and fuel. Tetangco said the BSP expects prices to rise an average of 2.3 percent in 2016, and 2.9 percent in 2017. Both rates are still within target.
BSP Deputy Governor Diwa C. Guinigundo said growth prospects for the Philippine economy remained bright. State targets of gross domestic product (GDP) growth of 7 to 8 percent in 2016 and 2017 were “doable,” given strong consumer spending and rising government spending. Paolo G. Montecillo