At its meeting today, the Monetary Board decided to leave unchanged the overnight policy interest rates. The interest rates on term RRPs, RPs, and special deposit accounts (SDAs) were also maintained. The reserve requirement ratios remained unchanged as well.
The Monetary Board’s decision is based on its assessment that the inflation outlook continues to be manageable, with within-target headline inflation and well-contained inflation expectations. Latest baseline forecasts indicate that the annual inflation rates for 2011-2013 are likely to fall within the 3-5 percent target range. The Monetary Board also took into account the data showing subdued domestic economic activity in the third quarter, due to the weather-related slowdown in the expansion of the agricultural sector, weak global economy and concerns over Europe’s sovereign and banking sectors.
At the same time, the Monetary Board considers the risks surrounding the inflation outlook to remain tilted to the downside. Weak global economic recovery is likely to be reflected in easing global demand and commodity price pressures. The Board also noted that some upside risks to prices remain, including potential increases in liquidity due to sustained capital inflows.
The Monetary Board believes that, on balance, the prevailing monetary policy settings are appropriately calibrated to the outlook for inflation and domestic economic activity. The BSP will continue to monitor price and demand conditions to ensure that monetary policy remains in line with price stability while being supportive of economic growth.