BSP may keep current policy settings if inflation remains stable

MANILA, Philippines - The Bangko Sentral ng Pilipinas said yesterday  policy settings may be left unchanged as long as inflation remains manageable.

BSP Governor Amando M. Tetangco Jr. made the comment after the Monetary Board last week kept key policy rates steady after two consecutive meetings of hiking them by 25 basis points each.

“If the inflation situation and the inflation forecast remain favorable and manageable, and the relevant factors are in place [such as] there are no second-round effects and no financial stability issues, then the market can expect the BSP to maintain the current stance of policy,” Tetangco said.

Monetary authorities last week said inflation expectations are expected to fall within the three to five target for this year and the two to four percent ranges for 2015 and 2016, prompting them to maintain key policy rates.

Earlier, the rates were hiked to ensure inflation would remain within the target bands until 2016. Moreover, the BSP had earlier hiked the reserve requirement ratios and the Special Deposit Account rate to rein in excess liquidity.

Inflation eased to 4.4 percent in September from 4.9 percent in August and in July amid lower increases in food prices and in housing and utility rates. The BSP had forecast the October rate to settle within 3.7 percent to 4.6 percent.

The BSP considers what’s happening in the country and abroad and their effect on the domestic inflation when revisiting the monetary policy settings.

The Monetary Board has one rate-setting meeting left this year, on Dec. 11. Analysts expect the central bank to keep key policy rates steady until at the second quarter of next year.

 “The BSP isteadfast in maintaining stable prices to provide a macro environment supportive of investments and a regulatory framework for financial inclusion,” Tetangco said.