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MANILA, Dec. 17 (Xinhua) – The central bank of the Philippines decided Thursday to keep the interest rate on the overnight reverse repurchase facility at 2.0 percent.
The Bangko Sentral ng Pilipinas (BSP) said that interest rates on demand deposits and credit facilities also remained at 1.5 percent and 2.5 percent, respectively.
BSP Governor Benjamin Diokno said the currency board’s decision was based on its assessment that the inflationary environment remains benign, the BSP said.
He said the latest benchmark forecasts have risen slightly due to the sharp rise in global crude oil prices and higher-than-expected food inflation in November.
However, given that the rise in food prices is transitory, he said the future trajectory of inflation is expected to remain firmly within the government’s target of 2 to 4 percent over the policy horizon.
“The balance of risks to the inflation outlook is also tilting downward from 2020 to 2022 due in large part to possible disruptions in national and global economic activity amid the ongoing pandemic,” Diokno told a virtual conference.
Meanwhile, he said that inflation expectations remain broadly consistent with the inflation target.
He said the board noted that the resurgence of COVID-19 cases globally has moderated economic activity with the reimposition of preventive measures in recent weeks.
However, he said optimism about vaccine delivery has raised market sentiment, supporting better prospects for global growth.
On the home front, he said the board also saw early signs of better mobility and sentiment.
“While recent natural calamities could spell strong headwinds for growth, further relaxation of quarantine measures should help facilitate the economy’s recovery in the coming months,” he said.
“Given these considerations, the Monetary Board is of the opinion that the monetary policy configuration remains appropriate,” Diokno said.
He said the board believes that an accommodative monetary policy stance, coupled with sustained fiscal initiatives to ensure public welfare, should accelerate the economy’s transition to a sustainable recovery.
The Philippines now has 454,447 confirmed cases of COVID-19, including 8,850 deaths. Final product
