Filipino Key Overnight Borrowing Rate Left at 4.0%

January 28, 2010

As expected, Bangko Sentral ng Pilipinas made no changes in its 4.0% overnight borrowing or 6.0% overnight lending rates.  However, in a phase-out of a liquidity-promoting action introduced 11 months ago, the peso rediscount window charge was restored to the overnight borrowing rate level from 50 basis points below such.  A statement from monetary officials called the present rate structure “appropriate,” inflation expectations “manageable,” and demand pressure “moderate.”  CPI inflation prospects for 2010-11 were called consistent with a target range of 2.5-4.5%.  GDP is seen expanding 3% give or take a half percentage point.  All in all, the statement exudes no urgency to raise key interest rates soon.  Starting in December 2008 with a cut of 50 basis points and ending in July with a 25-bp reduction of key rates, the central bank implemented 200 basis points of reduction in its key lending rate.  There were also cuts of 50 bps last January and 25 bps each in March April, and May.

Copyright Larry Greenberg 2010.  All rights reserved.  No secondary distribution without express permission.

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