MANILA, Philippines – The Bangko Sentral ng Pilipinas (BSP) in a policy meeting on Thursday, June 19, kept its interest rates steady, but hiked the rate on special deposits amid inflation pressures.
The central bank also raised its inflation forecasts for this year and 2015.
In a statement, the BSP said its Monetary Board maintained its interest rates at record lows of 3.5% for overnight borrowing and 5.5% for overnight lending.
However, it raised the interest rate on the Special Deposit Account (SDA) facility by 25 basis points to 2.25% from 2% across all tenors effective immediately.
“The Monetary Board decided to adjust the SDA rate to counter risks to price and financial stability that could emanate from ample liquidity, noting that a modest upward adjustment would be prudent amid robust credit growth,” the BSP said.
Prior to the hike in the SDA rate, the central bank hiked banks’ reserve requirements twice to mop up excess liquidity from the financial system.
Inflation forecasts raised
The BSP also changed its inflation forecasts. It said inflation was expected to settle at 4.4% this year, instead of its earlier projection of 4.3%. Inflation in 2015 would likely average 3.7%, versus the previous estimate of 3.4%.
“Latest baseline inflation forecasts have risen due to the higher inflation outturn in May and the inclusion of the potential impact of El Niño on food and utility prices,” it said. (READ: Inflation hits 2-1/2 year high in May)
“The balance of risks to the inflation outlook remains tilted toward the upside,” it added. – Rappler.com
There are no comments yet. Add your comment to start the conversation.