BSP keeps rates on hold as expected

The Bangko Sentral ng Pilipinas (BSP) hit the pause button for the fifth straight policy meeting as it kept the benchmark interest rates steady yesterday, but it may start cutting borrowing costs as early as August if a sustained downtrend in inflation becomes fully evident.

- KEISHA TA-ASAN

At its third policy review of the year yesterday, the central bank's Monetary Board decided to keep the target reverse repurchase rate unchanged at 6.50 percent, the overnight deposit rate at six percent and the overnight lending rate at seven percent.

"The Monetary Board deems it appropriate to ensure sufficiently tight monetary policy settings until inflation settles firmly within the target range," BSP Governor Eli Remolona Jr. said in a press conference.

"A restrictive policy stance will also help keep inflation expectations anchored amid a possible buildup in upside risks to future inflation," he said.

Remolona said latest projections indicate that the inflation outlook continues to lean toward the upside amid potential price pressures from higher transport charges, food prices, electricity rates and global oil prices.