Monetary Board keeps policy rates unchanged

March 22, 2018

The Monetary Board on Thursday decided to maintain its policy rate, the interest rate on the Bangko Sentral ng Pilipinas' overnight reverse repurchase (RRP) facility, steady at 3 percent.

Corresponding interest rates on the overnight lending and deposit facilities remained steady.

The Monetary Board's decision is based on its assessment that while recent inflation outturns show an elevated path in 2018, the latest baseline forecasts continue to show inflation  within  target in 2018 and moderating further in 2019.

The Monetary Board noted that inflation expectations have started to rise and will therefore need to be monitored closely in the coming months. It was also observed that economic growth remains solid enough to absorb some policy tightening if warranted.

The Monetary Board also considered prospects for domestic activity continue to be firm on the back of robust domestic demand, strong growth in credit and liquidity, and a sustained recovery in global economic growth.

The Monetary Board observed that risks to the inflation outlook remain weighted toward the upside owing mainly to price pressures from pending petitions for adjustments in minimum wages and transportation fares.

Non-monetary measures such as institutional arrangements in setting transportation fares and minimum wages, unconditional cash transfers, as well as transport subsidies are expected to help mitigate these inflationary impulses. Proposed reforms in the rice industry could also help temper price pressures. DMS