Filipino Monetary Policy Unchanged As Expected

November 18, 2010

Policymakers at Bangko Sentral ng Pilipinas once more left their key lending and borrowing rates at 6% and 4%, respectively, where such have been since a cut of 25 basis points announce July 9, 2009.  The Philippines has a good combination of robust domestic demand-led growth and manageable inflation as attested in a statement from the central bank.  On-year CPI inflation in October fell below 3%.  The central bank’s target range for inflation falls to 3-5% next year and in 2012 from 3.5-5.5%, and officials are confident those goals will be met and consider current policy settings appropriate.  First-half 2010 GDP was 7.8% greater than a year earlier.  Two risks that the authorities promise to monitor are a) commodity prices and b) a recent run-up in asset price caused by capital inflows.  The next interest rate policy announcement will be made on the penultimate day of 2010.  During the recession, which saw GDP contract 1.9% in 2009, the 4.0% was reduced by 200 basis points in all via two initial 50-bp moves in December 2008 and January 2009 and four subsequent cuts of 25 bps administered in March, April, May and July 2009.

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

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