The Bangko Sentral ng Pilipinas held its overnight borrowing rate unchanged at 4.50% and the overnight lending rate at 6.50%, and kept reserve requirements unchanged at 21%. The Bank said: "The Monetary Board is of the view that the risks to the inflation outlook may be receding as global inflationary pressures are expected to ease with the slowdown in the recovery of advanced economies. Food prices have also remained tame with favorable supply conditions in both domestic and international markets. The abating price pressures give monetary authorities sufficient room to keep policy rates on hold. A pause in the policy stance allows for careful assessment of inflation risks amid signs of sluggish global economic growth. The Monetary Board believes that the current monetary policy stance remains in line with the need to safeguard price stability and support sustained economic growth."
The Philippine central bank last raised its interest rate in May this year by 25 basis points to 4.50%, and increased reserve requirements by 100bps at its previous meeting. The Philippines reported annual consumer price inflation of 4% in July, down from 4.7% in June, 4.5% in May and 4.3% in April. Inflation is currently tracking inside the Bank's inflation target range of 3%-5%. The Bank said: "Latest baseline forecasts continue to indicate that average annual inflation is likely to settle within the 3-5 percent target range for 2011-2013 while inflation expectations remain firmly anchored given the moderating commodity prices and the recent string of stable inflation rates." The Bank next meets on the 20th of October.
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