BSP keeps policy rates unchanged on inflation outlook

(Updated 7:16 p.m.) The Bangko Sentral ng Pilipinas (BSP) on Thursday kept its policy rates unchanged at 4 percent for overnight borrowing and 6 percent for overnight lending, with inflation expected to stay tame. “The Monetary Board’s decision was based on its assessment that the inflation outlook remains favorable, indicating that current policy settings continue to be appropriate," BSP Gov. Amando Tetangco Jr. said in a briefing after the board's last rate-setting huddle for the year. Since July 2009, the Monetary Board has kept the overnight borrowing and lending rates at 4 and 6 percent, respectively. During Thursday's board meeting, the seven-man team revised its inflation forecasts for the next three years. The forecasts are still within the earlier target range of 3-5 percent for 2011-2012, Tetangco said. “Latest baseline forecasts show inflation settling within the target range of 4.5 percent, plus or minus 1 [percentage point] for 2010, and 4 percent plus or minus 1 [percentage point] for 2011 and 2012," Tetangco said. “The Monetary Board noted that the growth in credit and liquidity are broadly at pace with economic activity. Moreover, the current movements of asset prices, particularly in the equities and property markets, do not appear to pose any short-term challenge to the economy," he added. The fare increases of P10 for MRT or Metro Rail Transit and P8 for LRT or Light Rail Transit starting January next year were considered in the inflation forecasts. “The BSP will remain vigilant against any emerging risks to the inflation outlook and will adjust policy settings if and when needed to ensure that future inflation remains consistent with the medium-term target while being supportive of sustainable economic growth," Tetangco said. — VS, GMANews.TV