By Lee Chipongian
The central bank left its key rate unchanged at 4.75 percent during Thursday’s Monetary Board meeting, the third time the interest rate was untouched, based on a more stabilized inflation expectations and easing price pressures.
In his first Monetary Board policy meeting, Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno said inflation pressures have “eased further since the previous monetary policy meeting, reflecting mainly the decline in food prices amid improved supply conditions.”
A logo of the Bangko Sentral ng Pilipinas is seen at their headquarters in Manila, (REUTERS/Romeo Ranoco / MANILA BULLETIN)
“The Monetary Board observed that overall prospects for domestic activity continue to be firm, supported by a projected recovery in household spending and the continued implementation of the government's infrastructure program. However, there are risks to economic growth in 2019 if the current budget impasse in Congress is not resolved soon,” said Diokno.
In the meantime, BSP Deputy Governor Diwa C. Guinigundo said the 2019 inflation forecast has been lowered to three percent flat from the previous estimate of 3.1 percent (February 7). Next year’s inflation forecast remains at three percent.
This is as risks to the inflation outlook “remained broadly balanced” for this year despite further risks coming from the prolonged EI Niño and higher-than-expected increases in global oil and food prices. For 2020, the risks “lean toward the downside as tighter global financial conditions and geopolitical risks temper global economic activity and potential upward pressures on commodity prices.”
Guinigundo said they expect the downward trajectory of inflation will continue in the next two years. “By 2020 we expect it will stabilize at three percent,” he said, adding that they see lower Dubai crude oil price assumptions this year and in 2020.