BSP keeps benchmark interest rate at 2 percent

ABS-CBN News

Posted at Mar 24 2022 03:13 PM | Updated as of Mar 24 2022 03:59 PM

MANILA - The Bangko Sentral ng Pilipinas on Thursday kept the country's benchmark interest rate at a record low 2 percent.

The BSP's key interest rate has not been changed since November 2020 as the central bank committed to supporting economic recovery despite upticks in inflation. 

"On balance, the Monetary Board sees scope to maintain the BSP’s policy settings in order to safeguard the momentum of economic recovery amid increased uncertainty, even as it continues to develop its plans for the gradual normalization of its extraordinary liquidity measures," said BSP Governor Benjamin Diokno. 

Prices of goods, especially petroleum products, have been rising in recent weeks due to the impact of Russia's invasion of Ukraine which pushed up world crude oil prices. 

Local pump prices spiked for 11 straight weeks, before easing last March 22.

Diokno earlier warned that inflation could rise in the coming months due to the impact of the ongoing tension between Russia and Ukraine.

The BSP also revised upwards its inflation forecast for 2022 and 2023 to 4.3 percent and 3.6 percent, respectively, from 3.7 percent and 3.3 percent, Diokno said.

Diokno said the revision is based on the average Dubai crude oil projection which was raised to $102.23 per barrel in 2022 and $82.33 per barrel next year.

"Given the potential broadening of price pressures over the near term, the BSP stands ready to respond to the build-up of inflation pressures that can disanchor inflation expectations that keep price and financial stability objectives," the governor said. 

Keeping the policy rate steady will support further economic growth and lending expansion, Diokno said. 

He said the economy is likely to return to its pre-pandemic trajectory by the second half of the year.

When asked if the monetary board is contemplating a cut in the reserve requirement for banks, Diokno said it is "in the agenda and we might do so in the second half of the year."
 

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