BSP seen keeping rates steady on Thursday


Posted at Aug 11 2015 05:01 PM | Updated as of Aug 12 2015 01:01 AM

MANILA - The Philippine central bank will leave its benchmark interest rate unchanged for a seventh straight meeting on Thursday, according to 17 analysts polled by Reuters.

While the central bank has room to ease monetary policy after inflation slowed to a record low in July, economists said it is expected to keep the overnight borrowing rate on hold at 4 percent given risks to higher consumer prices down the road.

Eleven analysts also said the central bank will keep its short-term special deposit account (SDA) rate steady at 2.50 percent on Thursday. One expects a cut in the SDA rate but it was not clear when.

Bangko Sentral ng Pilipinas (BSP) Governor Amando Tetangco said on Monday the central bank's current monetary policy remained "appropriately calibrated," with growth on a solid footing and inflation expected to settle within its 2-4 percent target this year.

Twelve of 14 economists who have long-term forecasts for monetary policy said interest rates will likely be kept on hold for the rest of 2015. One expected a hike in the fourth quarter, while one predicted a cut in September.

At least two economists called for a cut in banks' reserve requirement ratio from the current 20 percent to support economic growth amid faltering exports and slow government spending.

After Thursday's policy review, the central bank has three more meetings this year.