BSP keeps rates unchanged

Posted at 10/07/10 5:12 PM

MANILA, Philippines - The Bangko Sentral ng Pilipinas (BSP) said it has held its policy rate steady at 4% following a regular policy meeting on Thursday.

The policy rate has been at a record low of 4% since July 2009.

The Philippines is one of the few countries in Asia which have not raised rates since the global financial crisis.

Earlier, the BSP said policy rates could be on hold until 2011 as consumer prices may remain benign.

The annual inflation rate fell to 3.5% in September, down from 4% in August and the lowest since last November. The figure was also below market and central bank forecasts.

Eleven of 12 analysts in a Reuters poll on Monday had expected the central bank to keep its interest rates steady. Half predicted a rise before the end of 2010.

The government expects the economy to grow faster than a target of 5% to 6% this year, supported by a recovery in trade and remittances. It sees growth accelerating to 7% to 8% next year.

The BSP began unwinding crisis-driven liquidity policies in January, raising by 50 basis points to 4% the rate for lending short-term money under a peso rediscounting window. This was followed by 2 cuts in the budget for the facility, bringing it back to the pre-crisis level of P20 billion.

The central bank slashed rates by a total of 200 basis points between December 2008 and July 2009 to soften the blow of the global recession.