Philippine central bank keeps rate steady, sees risks to growth outlook

[MANILA] The Philippine central bank on Thursday (Feb 17) left key interest rates unchanged for a 10th consecutive policy meeting, reaffirming continued support for the domestic economy's recovery as it expects inflation to remain manageable.

The Bangko Sentral ng Pilipinas (BSP) kept the rate on the overnight reverse repurchase facility at a record 2 per cent, as expected by all 21 economists in a Reuters poll.

The interest rates on the overnight deposit and lending facilities were also kept at 1.5 per cent and 2.5 per cent, respectively.

"The monetary board deems it prudent to maintain the BSP's accommodative policy stance given a manageable inflation environment and emerging uncertainty surrounding domestic and global growth prospects," BSP Governor Benjamin Diokno said.

Last week, he said the BSP would not necessarily follow the US Federal Reserve, which has signalled it may start raising interest rates in March to tackle inflation.

The BSP will wait until the end of the year before raising interest rates, a Feb 1-14 Reuters poll found, in line with Diokno's view that monetary policy would remain accommodative as long as required to underpin growth.

The Philippines aims to achieve gross domestic product growth rates of 7-9 per cent this year and 6-7 per cent in 2023 and 2024, banking on an accelerated Covid-19 vaccination drive to further ease restrictions.

Philippine annual inflation eased to 3 per cent in January from the previous month's 3.2 per cent rate, reflecting slower increases in the price of food and utilities.

The BSP expects inflation to average 3.7 per cent in 2022 and 3.3 per cent in 2023, within the the 2-4 per cent target range. REUTERS