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Monetary Board Holds Policy Settings Steady

05.11.2017

At its meeting today, the Monetary Board decided to maintain the interest rate on the BSP’s overnight reverse repurchase (RRP) facility at 3.0 percent. The corresponding interest rates on the overnight lending and deposit facilities were also kept steady. The reserve requirement ratios were likewise left unchanged.

The Monetary Board’s decision is based on its assessment of manageable inflation. Latest baseline forecasts continue to be within the target range of 3.0 percent ± 1 percentage point for 2017-2018. Market expectations likewise remain anchored to the inflation target over the policy horizon. At the same time, the Monetary Board observed that inflation has remained elevated due largely to the recent increases in food prices and underlying inflation pressures.

The Monetary Board also noted that the balance of risks surrounding the inflation outlook continues to be tilted toward the upside, given the transitory impact of the proposed tax reform program as well as possible further adjustments in transportation fares and electricity rates. Meanwhile, prospects for the global economy have improved, but risks remain tilted to the downside. The Monetary Board emphasized that even amid external headwinds, the outlook for domestic economic activity remains intact owing to buoyant household consumption and private investment, increased government spending, ample liquidity, and sustained credit growth.

Going forward, the BSP will remain vigilant against any risks to the inflation outlook and will adjust its policy settings as needed to ensure that future inflation remains consistent with the medium-term target while being supportive of sustainable economic growth.

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