The Bangko Sentral ng Pilipinas kept key interest rates steady at 3.5 percent for overnight lending and 2.5 percent for deposits during its last meeting on monetary policy for the year, on expectations of manageable inflation in the near term.
The Bangko Sentral ng Pilipinas kept key interest rates steady at 3.5 percent for overnight lending and 2.5 percent for deposits during its last meeting on monetary policy for the year, on expectations of manageable inflation in the near term.
Deputy Governor Diwa C. Guinigundo said the decision of the Monetary Board, the BSP’s highest policymaking body, was based on its assessment that the outlook for the inflation environment “has been broadly unchanged”.
“This is indicated by the latest baseline forecasts remaining within the target range of 2-4 percent for 2018 to 2019. Inflation expectations also continue to be firmly anchored to the target over the policy horizon,” Guinigundo explained.
Guinigundo said the Monetary Board kept the inflation forecasts of 3.2 percent for 2017, 3.4 percent for 2018, and 3.2 percent for 2019.
As of end-November, inflation averaged 3.2 percent.
“The overall balance of risks to the inflation outlook remains tilted toward the upside due in part to possible higher crude oil prices. While there may be potential transitory effects on consumer prices from the proposed tax reform program, various mitigation measures and the resulting improvement in output and productivity are also expected to temper the impact on inflation over the medium term,” Guinigundo said.
The first tax reform package that will slash personal income tax rates while jacking up taxes slapped on consumption is expected to be signed by President Duterte before yearend in order to be implemented early next year.
Also, “the proposed reforms in the rice industry involving the replacement of quantitative restrictions with tariffs and the deregulation of rice imports could serve to reduce inflation,” Guinigundo added.