BSP keeps rates steady amid high inflation

The Bangko Sentral ng Pilipinas (BSP) Monetary Board kept key interest rates unchanged on February 11, maintaining the overnight reverse repurchase facility at 2%, and deposit and lending facilities at 1.5% and 2.5%, respectively.

Despite inflation exceeding the target band due to supply constraints on meat and vegetables and rising international oil prices, BSP Governor Benjamin Diokno stated that inflation is expected to decelerate once these issues are addressed.

Diokno emphasized the need for coordinated efforts with government agencies to implement non-monetary measures to ensure access to internationally competitive food prices, thereby mitigating supply-side impacts on inflation.

The Monetary Board noted that while recent indicators show some economic improvement, new virus variants and delays in mass vaccination programs may temper recovery prospects.

Deputy Governor Francisco Dakila Jr. increased the central bank's average inflation projection for 2021 to 4% from 3.2%, but slashed the 2022 forecast to 2.7% from 2.9%, citing a balanced outlook with downside risks in 2022.