Philippines Central Bank holds rates steady during second week of September

The Central Bank of the Philippines (BSP) held its policy rates steady, including the benchmark overnight borrowing rate at 3.50 percent, in light of a "benign inflation environment" but added that the balance of risks to the inflation outlook had shifted slightly to the upside due to volatile oil prices from geopolitical tensions in the Middle East.

    The BSP, which has held its benchmark rate steady since October 2012, said the latest forecasts still show that the future path of inflation is broadly in line with the central bank's 2013, 2014 target range of 4.0 percent, plus/minus 1.0 percentage point, and the 2015 range of 3.0 percent, plus/minus 1 percentage point.
    Despite the slightly higher risk to inflation from volatile oil prices, the BSP said world economic prospects remain subdued "thus tempering pressures on global commodity prices."
    The central bank's decision was widely expected after the governor, Amando Tetangco, said earlier today that he saw no urgency to change the policy stance as the inflation outlook remains benign.

    The headline inflation rate in the Philippines eased to 2.1 percent in August from July's 2.5 percent, the lowest since October 2009, and within the BSP's forecast of 1.9-2.7 percent. The year-to-date inflation rate is at 2.8 percent.

    "Domestic economic activity has also been growing at a solid pace, supported by firm demand and buoyant business sentiment," the BSP said, adding robust lending to the productive sectors in the economy should also help moderate price pressures.

    The central bank's recent adjustments of its Special Deposit Account facility contributed to a rise in domestic liquidity (M3) growth in July.

    "As M3 growth rats are expected to decline once these adjustments have been completed, a temporary period of strong M3 growth is not expected to lead to significant inflationary pressure," the central bank said.

    The Philippine economy expanded by 1.4 percent in the second quarter from the first for annual growth of 7.5 percent, slightly down from the first quarter's 7.7 percent.

Philippines holds rates steady, risk to inflation from oil - Central Bank News

for more details log on to Central Bank of the Philippines website : http://www.bsp.gov.ph/ 

Philippines Central Bank maintains all rates on balanced inflation risk

The Philippine central bank held its policy rates steady, including the Special Deposit Account (SDA), saying the risks to inflation remain broadly balanced, economic growth is strong and recent market volatility calls for caution in assessing the policy stance.
    The Central Bank of the Philippines (BSP) said inflation is expected to remain within the bank's target range in the next two years, supported by well-contained inflation expectations and subdued global economic prospects that will temper upward pressures on commodity prices.
    "Nonetheless, upside risks to the inflation outlook remain, including pending utility rate adjustments as well as the recent depreciation of the peso," the bank said.
    The BSP held its benchmark overnight borrowing rate, or reverse repurchase facility rate, steady at 3.50 percent - unchanged since October 2012 - along with its overnight lending rate at 5.5 percent, and the SDA rate at 2.0 percent.
    The decision to hold rates was widely expected following a statement last week by the bank governor who said there was "no urgency to change policy because inflation remains under control."
    While keeping its main rates steady this year, the BSP has cut the SDA rate by 150 basis points to make it less attractive for foreign funds to park their money there, putting upward pressure on the peso. Last year the peso rose by almost 7 percent against the U.S. dollar.

    But since early May, the peso and other emerging market currencies has come under pressure from capital outflows, dropping 7 percent against the U.S. dollar from May 10 to June 25. The lower peso tends to raise import prices, putting upward pressure on inflation. 

    But since last June, the peso has bounced back and is now only down 5.4 percent since the start of the year, quoted at 41 peso to the U.S. dollar today.
    In June the Philippine inflation rate rose slightly to 2.8 percent from 2.6 percent in May and April.
    Last month the BSP also said inflation was expected to remain within the bank's target for 2013 and 2014 - 4.0 percent plus/minus one percentage point - and the 2015 target of 3.0 percent, plus/minus one percentage point.
    In April the BSP forecast 2013 inflation of 3.3 percent.
    The Philippine economy continues to be robust, the bank said, supported by domestic demand and buoyant market confidence, strong domestic liquidity and bank lending
     Gross Domestic Product was up 2.2 percent in the first quarter from the fourth quarter for annual growth of 7.8 percent, the fastest rate since the second quarter of 2010. The government has forecast growth this year of 6-7 percent compared with 6.6 percent in 201

Philippines maintains all rates on balanced inflation risk - Central Bank News

for more details log on to Central Bank of the Philippines website : http://www.bsp.gov.ph/