BSP keeps policy rate unchanged, as expected

MANILA, Philippines  —The Bangko Sentral ng Pilipinas (BSP) has kept its tight monetary policy settings, a widely expected decision as monetary authorities wait for a more sustained downtrend of inflation.

At its first policy meeting this year on Wednesday, the Monetary Board left its key rate untouched at 6.5 percent, a 16-year high. The BSP made the announcement at a press conference on Thursday.

READ: PH central bank says to keep policy tight despite an easing in inflation

It was a decision that had been repeatedly telegraphed by the BSP to the market, as the central bank deemed it “necessary to keep monetary policy settings sufficiently tight until a sustained downtrend in inflation becomes evident.”

This, despite inflation softening to an annualized rate of 2.8 percent in January, the lowest reading in over three years. It was the second consecutive month that price growth moderated to within the BSP’s 2 to 4 percent target after hovering above that range for 20 months.

READ: Rate cut in H1 ‘possible’–Remolona

But Governor Eli Remolona Jr. had said a rate cut is “possible” this year. For now, analysts expect the timing of the easing to be in lockstep with the US Federal Reserve.