BSP maintains policy rates, again

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(CNN Philippines) — The Bangko Sentral ng Pilipinas' (BSP) Monetary Board announced on Thursday (May 14) that it has decided to keep the bank's policy rates unchanged, based on its assessment of a "manageable" inflation environment.

Rates for the overnight borrowing or reverse repurchase (RRP) facility, and overnight lending or repurchase (RP) facility stand at 4% and 6%, respectively.

Read: Bank lending slows in March

The special deposit account (SDA) rate remains at 2.5%, while the reserve requirement ratios for universal and commercial banks were also maintained at 20%.

This marks the fifth consecutive time that the central bank has left its key policy rates untouched. Rates were last raised in September 2014.

In a statement, BSP Gov. Amando Tetangco said that the bank's latest baseline forecasts continue to indicate that inflation is likely to settle within the lower half of the government's target range of 2% to 4% for 2015-2016.

"The Monetary Board likewise observed that the risks to the inflation outlook continue to be broadly balanced, with upside risks emanating from pending petitions for adjustments in electricity rates and possible power shortages."

Inflation for the first three months of 2015 eased off at 2.4%, substantially lower than the 4.1% recorded in the same period of 2014, and the 3.6% registered in the previous quarter.

Related: FDI up 17.9% in February 2015

"Meanwhile, downside risks remain for global growth, even as prospects have become more evenly balanced," the BSP governor said.

On the domestic level, Tetangco said the the Monetary Board has noted noted robust demand conditions owing to "owing to solid private demand and buoyant business sentiment."

"In the months ahead, ample domestic liquidity and higher public spending are expected to support domestic economic activity and sustain the economy’s momentum."