The Monetary Board decided today to keep the BSP’s policy rates unchanged at 11.0 percent and 13.25 percent for the overnight RRP and RP rates, respectively.
The Monetary Board considers the current policy setting as appropriate given the outlook for inflation for this year. The board believes that, while current inflationary pressures appear benign, there are downside risks that dictate a circumspect approach in further reducing policy rates.
It may be recalled that the latest rate cut—that transpired on 12 February 2001—effectively reversed the 400-basis point increase in policy rates that took effect in October last year. The board believes that these policy rate cuts must be allowed to work their way through the system before further rate cuts are considered.
The Monetary Board will revisit the monetary policy settings during the next few weeks, and will watch closely developments in the financial and fiscal sector and more importantly, the emerging inflation scenario to guide its actions.