Philippines’ BSP holds interest rates at bay

The central bank, however, warns of upcoming inflation.

The Philippines’ central bank, Bangko Sentral ng Pilipinas (BSP), has continued to retain its accommodative monetary policy stance to help boost the economy amidst an uncertain outlook due to the spread of COVID-19.

The central bank kept the overnight reverse repurchase rate unchanged at 2% for the seventh straight meeting whilst both the overnight deposit rate and lending rate were also left untouched at 1.50% and 2.50%, respectively.

The central bank also revised its inflation outlook to 4.4% for 2021 from a previous 4.1%. BSP also projects the nation’s headline inflation to stay above its 2.0%-4.0% target range and hover near 5% levels up to October, before tapering off towards the upper bound of its target range from November onwards and back within target range in 2022-2023. 

BSP, however, stressed that recovery will still rely on measures to prevent the negative impacts on the economy such as acceleration of the government’s vaccination program and a recalibration of existing quarantine protocols.

“The Monetary Board reiterates that, together with appropriate fiscal and health interventions, keeping a steady hand on the BSP’s policy levers will allow the momentum of economic recovery to gain more traction by helping boost domestic demand and market confidence,” The BSP governor Benjamin Diokno said.