Unchanged Central Bank Rate in The Philippines as Expected

December 1, 2011

The Filipino Monetary Board left its overnight policy rate unchanged at 4.5%, which was what analysts had anticipated.  Two hikes of 25 basis points were implemented in March and May of this year, and reserve requirements were raised in June and July.  Those were the last policy changes of any sort, and now officials are satisfied that inflation will lie in its targeted 3-5% range over the coming two years.  Expected inflation is “well-contained,” and growth prospects have softened because of poor weather, lessening global demand, and the euro debt crisis.  A statement on the central bank web site states that “on balance, the prevailing monetary policy settings are appropriately calibrated to the outlook for inflation and domestic economic activity. The BSP will continue to monitor price and demand conditions to ensure that monetary policy remains in line with price stability while being supportive of economic growth.” 

This was the last Monetary Board meeting of 2011; the first one in 2012 will be held in February. There were six rate reductions during the global financial crisis, totaling 200 basis points between December 2008 and July 2009.  The key interest rate had been at 4.0% from the end of that episode until March of this year.

Copyright 2011, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.



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