Philippines keeps rate at 3%; inflation expected to settle in target

By Wendy Van Sickle

Columbus, Ohio, Sept. 22 – Bangko Sentral ng Pilipinas’ monetary board decided to keep the interest rate unchanged at 3% on its overnight reverse repurchase facility at its meeting Thursday.

The monetary board, according to a bank notice, said its decision is based on its assessment that the inflation environment continues to be “manageable.”

Inflation is likely to settle slightly below the 3% plus or minus 1% target range in 2016 and climb to the center of the range in 2017 and 2018, the bank predicted.

The board said overall inflation risks appear to be tilted toward the upside, including pending petitions to adjust electricity rates, a proposed adjustment in excise tax rates of petroleum products and the potential second-round effect on transport fares. Subdued global economic activity is the main downside risk, the board said.

“With these considerations, the monetary board believes that current monetary policy settings remain appropriate. At the same time, increased uncertainty over prospects for growth and monetary policy action in major advanced economies warrants prudence in policy settings,” the board added.

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