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Monetary Board Keeps Policy Rates Unchanged

05.14.2015

At its meeting today, the Monetary Board decided to maintain the BSP's key policy rates at 4.00 percent for the overnight borrowing or reverse repurchase (RRP) facility and 6.00 percent for the overnight lending or repurchase (RP) facility.  The interest rates on term RRPs, RPs and special deposit accounts (SDA) were also kept steady. The reserve requirement ratios were likewise left unchanged.

The Monetary Board’s decision is based on its assessment that current monetary policy settings remain appropriate given a manageable inflation environment. Latest baseline forecasts continue to indicate that inflation is likely to settle within the lower half of the target range of 3.0 percent ± 1 percentage point for 2015-2016, while inflation expectations remain firmly anchored given the recent string of inflation outturns. The Monetary Board likewise observed that the risks to the inflation outlook continue to be broadly balanced, with upside risks emanating from pending petitions for adjustments in electricity rates and possible power shortages. Meanwhile, downside risks remain for global growth, even as prospects have become more evenly balanced.

At the same time, the Monetary Board noted that domestic demand conditions remain robust, owing to solid private demand and buoyant business sentiment. In the months ahead, ample domestic liquidity and higher public spending are expected to support domestic economic activity and sustain the economy’s momentum.

Given these considerations, the Monetary Board believes that prevailing monetary policy settings are appropriately calibrated to the outlook for inflation and domestic economic activity. Going forward, the BSP will continue to monitor domestic and external developments to ensure that the monetary policy stance remains in line with maintaining price and financial stability.

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