benjamin diokno
At its meeting, the BSP’s Monetary Board kept its key rate at 4.0%.
Mong Pintolo, file
‘Prudent pause’: BSP keeps policy rates unchanged
Ian Nicolas Cigaral ( - November 14, 2019 - 9:06pm

MANILA, Philippines — The Bangko Sentral ng Pilipinas on Thursday left its benchmark rate unchanged — a decision described as a “prudent pause” to let the previous cuts to the policy rate and reserve requirement work their way through the economy.

At its meeting, the BSP’s Monetary Board kept its key rate at 4.0%.

“The Monetary Board believes that prevailing monetary policy settings remain appropriate,” the BSP said in a statement.

“This is supported by the benign inflation outlook and a firm outlook for domestic economic growth,” it added.

The Philippine economy recovered from a slowdown in the third quarter, expanding 6.2% partly boosted by a rebound in state spending.

Meanwhile, inflation eased to 0.8% in October, slower than September’s 0.9% and a sharp fall from a year ago, which saw inflation peak at a nine-year high of 6.7% amid food supply bottlenecks at the time.

Here’s what analysts say on the BSP’s decision:

“With growth set to disappoint and inflation likely to remain weak, we expect more easing next year... The main reason we think the BSP will cut rates again is the poor outlook for growth.” — Alex Holmes, Asia economist at Capital Economics

“Given a possible miss on the growth objective, we expect Governor Diokno to come out swinging in 2020 with up to 50 basis points of policy rate cuts to help bolster growth momentum... We also expect BSP to carry out its phased and pre-announced reductions to the reserve requirement ratio (RRR) in 2020 as Diokno looks to align the Philippines’ RRR with regional peers.” — Nicholas Mapa, senior economist at ING Bank Manila

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