2021.11.1815:04:00UTC+00Philippine Central Bank Holds Key Interest Rate Unchanged

The Philippine central bank left its key interest rate unchanged again as policymakers adopted a wait-and-watch stance amid upside risks to inflation outlook and a pick up in growth.

The Monetary Board decided to maintain the interest rate on the overnight reverse repurchase facility at 2.0 percent, the Bangko Sentral Ng Pilipinas said Thursday.

The interest rates on the overnight deposit and lending facilities were kept at 1.5 percent and 2.5 percent, respectively.

The bank expects average inflation to slightly exceed the upper end of the target band of 2-4 percent this year. That said, inflation is projected to settle close to the midpoint of the target range in 2022 and 2023.

"However, the risks to the inflation outlook have shifted towards the upside for 2022 even as they remain broadly balanced for 2023," the bank said. Upside risks include those linked to the potential impact of weather disturbances on the prices of key food items, petitions for transport fare hikes, and the possibility of a prolonged recovery of domestic pork supply.

Strong global demand amid persistent supply-chain bottlenecks could also exert further upward pressures on international commodity prices, the bank added.

"On balance, the sum of new data suggests that there remains scope to hold monetary policy settings steady amid a manageable inflation environment," the central bank said. "The Monetary Board maintains that keeping a patient hand on the BSP's policy levers, along with appropriate fiscal and health interventions, will keep the economic recovery more sustainable over the next few quarters."