At its meeting on monetary policy today, the Monetary Board decided to keep the interest rate on the BSP’s overnight reverse repurchase (RRP) facility unchanged at 4.75 percent. The interest rates on the overnight lending and deposit facilities were likewise held steady.
In deciding to maintain the BSP’s monetary policy settings, the Monetary Board noted that the latest inflation forecasts show a lower path over the policy horizon, with inflation settling within the target band of 3.0 percent ± 1.0 percentage point for 2019-2020. Recent headline inflation readings indicate signs of receding price pressures as constraints on food supply continue to ease with the implementation of various non-monetary measures. Inflation expectations have also steadied given the decline in international crude oil prices and the stabilization of the peso.
Meanwhile, the risks to the inflation outlook have become more evenly balanced for 2019 and leans toward the downside for 2020 amid a more uncertain global economic environment, which could further mitigate upward pressures from commodity prices in the coming months.
Given these considerations, the Monetary Board deemed it prudent for the time being to keep monetary policy settings steady and allow previous monetary responses to continue to work their way through the economy. The Monetary Board emphasizes that it remains vigilant against developments that could affect the outlook for inflation and financial stability.
The BSP is prepared to take further policy action as appropriate to safeguard its price stability mandate.