BSP maintains interest rate at 4%

MANILA, Philippines [UPDATED] – Monetary officials decided to keep policy interest rates unchanged, according to the Bangko Sentral ng Pilipinas.

At its regular policy rate setting meeting on Thursday, April 19, the Monetary Board decided to keep key policy interest rates at 4% for overnight borrowing or reverse purchase (RRP) facility, and 6% for overnight lending repuchase facility.

This follows the two succeeding rate cuts, which the BSP said has yet to “work its way through the economy.”

Thus, a “prudent pause allows policymakers to better assess how the upside and downside risks to inflation will play out,” it said in a statement.

Since the start of the year, rates have been cut up to 50 basis points to a record low.

The BSP said it is keeping eye on soaring global crude prices and foreign exchange inflows, which affects domestic liquidity.

While inflation has eased to 2.6% in March from 2.7% in February, the BSP said crude prices still threaten domestic pump prices and other consumer goods.

“The uncertainty in the factors affecting the outlook for inflation therefore suggests a need for a pause in monetary policy adjustment,” it added.

Low interest rates are meant to spur economic growth by encouraging businesses to borrow for their expansion needs, and for citizens to invest in capital assets, including cars and real estate properties. – Rappler.com