The Philippine central bank on Wednesday maintained the interest rate on overnight reverse repurchase facility at 2 percent amidst low inflation and weakened growth of the country.
The Bangko Sentral ng Pilipinas (BSP) said the interest rates on the overnight deposit and lending facilities were likewise kept unchanged at 1.5 percent and 2.5 percent, respectively.
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“Latest inflation forecasts indicate that inflation is likely to settle within the target range in 2021 and 2022,” BSP Governor Benjamin Diokno reportedly said in an online briefing.
“The risks to the inflation outlook are also broadly balanced,” Diokno said, adding that the Monetary Board expects the domestic economy to continue to recover in the coming months, supported by the government’s targeted fiscal interventions and sustained rollout of the COVID-19 vaccine.
Improved prospects overseas should also support the outlook for domestic economic activity, he added.
Meanwhile, Diokno warned that the recent surge in COVID-19 infections and the resulting measures to contain it continue to tamper market confidence and pose substantial downside risks to domestic demand.
Diokno said the Monetary Board believes that sustained support for domestic demand remains a priority for monetary policy, especially as risk aversion continues to hamper credit activity despite ample liquidity in the financial system. (AW)
