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 left unchanged as well.
The Monetary Board’s decision is based on its assessment that the inflation environment continues to be manageable. Latest baseline forecasts indicate that inflation is likely to settle within the lower half of the target range of 3.0 percent ± 1 percentage point for 2015 and 2016. The forecasts are also supported by well-anchored inflation expectations, which remain within the target band over the policy horizon. The Monetary Board likewise noted that the risks to the inflation outlook continue to be broadly balanced, with upside risks emanating from pending petitions for adjustments in utility rates and possible power shortages. Meanwhile, global economic activity has turned slightly more positive but continues to be uneven, which could further mitigate upward pressures on commodity prices.
At the same time, the Monetary Board observed that domestic demand conditions remain robust, owing to solid private demand, adequate domestic liquidity, and buoyant business sentiment. Higher public spending is also expected to support economic activity.
Given these considerations, the Monetary Board is of the view that current monetary policy settings remain appropriate. Going forward, the BSP will continue to monitor domestic and external developments affecting the inflation outlook to ensure that the monetary policy stance remains consistent with its price and financial stability objectives