Philippines keeps key policy rates unchanged

MANILA, May 8 (Xinhua): The Philippine Monetary Board (MB) said Thursday that it has decided to maintain policy rates even as it hiked its average inflation forecast for the year. Monetary officials said average inflation for 2014 could settle at 4.3 per cent, slightly higher than their earlier projection of 4. 2 per cent.
Despite this, monetary officials kept overnight borrowing or reverse repurchase facility at 3.5 per cent while overnight lending or repurchase remains at 5.5 per cent. These rates have been unchanged since October 2012.
"The Monetary Board's decision is based on its assessment that current monetary policy settings continue to be appropriate given a manageable inflation environment," said Philippine central bank governor Amando Tetangco, Jr.
But monetary authorities again hiked its reserve requirement for banks by 1.0 percentage point effective May 30 to rein in the relatively high domestic liquidity growth. Domestic liquidity, or M3, has remained above 30 per cent for nine successive months to March.
Tetangco said the adjustments in reserve requirements are expected to help mitigate potential risks to financial stability that could arise from the strong growth in domestic liquidity.