The Philippine central bank decided to maintain its key rates unchanged on Thursday as the policy board assessed the current monetary settings as appropriate.
The Monetary Board of the Bangko Sentral ng Pilipinas maintained the overnight borrowing rate at 4.00 percent and the overnight lending at 6.00 percent. The reserve requirement ratios were also left unchanged.
The board said the inflation environment continues to be manageable. The bank expects inflation to settle within the lower half of the target range of 2-4 percent this year and in 2016.
Moreover, the risks to the inflation outlook continue to be broadly balanced. Moreover, domestic demand conditions remain robust and higher spending is expected to support economic activity.
Gareth Leather, an Asia economist at Capital Economics expects rates to remain on hold at 4 percent until the remainder of the year as inflation is likely to be at the bottom of the central bank’s target range and the economy to remain healthy.
The economist said the bank will be concerned about the build-up of risks in the financial sector with credit continuing to grow at an unsustainable pace.
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