BSP keeps rates unchanged
MANILA (UPDATE) - The Philippine central bank kept its main policy rate steady at a record low of 4 percent on Thursday, as expected, but said it was ready to adjust monetary settings, if needed, to support conditions for non-inflationary growth.
All 11 analysts polled by Reuters had expected the central bank to keep the overnight borrowing rate unchanged at a record low of 4 percent. Most of them forecast that the rate would be kept steady for the rest of the year.
Overnight rates unchanged at 4 percent for the borrowing facility and 6 percent for the lending window.
Government is targeting average inflation of 3 to 5 percent out to 2014. The central bank kept its forecast for average inflation in 2012 at 3.1 percent
Aninda Mitra, ANZ economist from Singapore, said the BSP statement seems to support the view that officials are "mindful of emerging risks to the path of inflation and are going to pause for an extended period."
"Authorities expect full-year inflation at the lower half of the 3-5 percent inflation target, implying a pickup in inflation from the 2.6 percent year-on-year rate in March 2012. These are likely to be driven by a stronger pickup in GDP growth and spurred by stronger government spending. The policy hold also anchors inflation expectations against the modest risks posed by oil price increases."
The peso ended at P42.61 per dollar before the rates announcement, easier than Wednesday's close at P42.65. The stock market ended 0.3 percent lower earlier in the day.