MANILA – The Bangko Sentral ng Pilipinas on Thursday kept borrowing costs unchanged as expected, after inflation eased further from near 10-year highs in 2018.
The overnight borrowing rate stayed at 4.75 percent after the Monetary Board’s first policy meeting for the year. It raised the benchmark by 175 basis points last year.
Analysts polled by Reuters and Bloomberg unanimously predicted that monetary authorities would keep the overnight rate steady after inflation in January cooled below forecasts at 4.4 percent.
Monetary policy will be “slight on the brake” as authorities review the impact of past actions, Bangko Sentral ng Pilipinas deputy governor Diwa Guinigundo said last Tuesday after the release of inflation data.
The Monetary Board will be “more strategic,” while checking the impact of a recent reduction in banks’ reserve requirements, Guinigundo said.
The bigger challenge for the BSP is to stay within its 2 to 4 percent inflation target, said Nomura Asia economist Euben Paracuelles.
The BSP lowered inflation forecast this year to 3.1 percent from 3.2 percent, Guinigundo said.
The BSP is “ripe” for policy easing, including a 25-basis point cut in the overnight rate in the first quarter and a further reduction in banks’ reserve ratio requirement, said Philippine National Bank president Wick Veloso.
The reserve ratio requirement for banks was not part of the policy meeting, Guinigundo said. (ABS-CBN News)
