The Monetary Board, the policymaking body of the Central Bank of the Philippines, said on Thursday that it has decided to maintain its policy rate, the interest rate on the Bank's overnight reverse repurchase (RRP) facility, steady at 3.0 percent.
It said the corresponding interest rates on the overnight lending and deposit facilities were also kept unchanged.
"The Monetary Board's decision is based on its assessment that while recent inflation outturns show an elevated path in 2018, the latest baseline forecasts continue to show inflation remaining within the inflation target in 2018 and moderating further in 2019," the Bank said in a statement.
The Monetary Board also said it considered that prospects for domestic activity continue to be firm on the back of robust domestic demand, strong growth in credit and liquidity, and a sustained recovery in global economic growth.
At the same time, the Monetary Board observed that the risks to the inflation outlook remain weighted toward the upside owing mainly to price pressures emanating from pending petitions for adjustments in minimum wages and transportation fares.
Nevertheless, it said the non-monetary measures such as institutional arrangements in setting transportation fares and minimum wages, unconditional cash transfers, as well as transport subsidies are expected to help mitigate these inflationary impulses.
Moreover, it said the proposed reforms in the rice industry could also help temper price pressures.
Meanwhile, the Monetary Board noted that inflation expectations have started to rise and will therefore need to be monitored closely in the coming months. It was also observed that economic growth remains solid enough to absorb some policy tightening if warranted.
"The Monetary Board stands firm in its intent to take immediate and appropriate measures to ensure that the monetary policy stance continues to support the Bank's price and financial stability objectives," the statement read.
It said the corresponding interest rates on the overnight lending and deposit facilities were also kept unchanged.
"The Monetary Board's decision is based on its assessment that while recent inflation outturns show an elevated path in 2018, the latest baseline forecasts continue to show inflation remaining within the inflation target in 2018 and moderating further in 2019," the Bank said in a statement.
The Monetary Board also said it considered that prospects for domestic activity continue to be firm on the back of robust domestic demand, strong growth in credit and liquidity, and a sustained recovery in global economic growth.
At the same time, the Monetary Board observed that the risks to the inflation outlook remain weighted toward the upside owing mainly to price pressures emanating from pending petitions for adjustments in minimum wages and transportation fares.
Nevertheless, it said the non-monetary measures such as institutional arrangements in setting transportation fares and minimum wages, unconditional cash transfers, as well as transport subsidies are expected to help mitigate these inflationary impulses.
Moreover, it said the proposed reforms in the rice industry could also help temper price pressures.
Meanwhile, the Monetary Board noted that inflation expectations have started to rise and will therefore need to be monitored closely in the coming months. It was also observed that economic growth remains solid enough to absorb some policy tightening if warranted.
"The Monetary Board stands firm in its intent to take immediate and appropriate measures to ensure that the monetary policy stance continues to support the Bank's price and financial stability objectives," the statement read.
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