MANILA, Oct 9 — Bangko Sentral ng Pilipinas (BSP) has decided to reduce its target reverse repurchase rate by 25 basis points to 4.75 per cent and the interest rates on the overnight deposit and lending facilities to 4.25 per cent and 5.25 per cent, respectively, reported Xinhua.
"This decision reflects our latest reading of economic conditions as well as judicious adjustments to our model. These adjustments reflect the new importance of business sentiments in light of the issues related to government infrastructure spending.
"We now find the inflation outlook is quite benign and well within the target range," said the country's central bank Governor Eli Remolina during a press conference today, adding that "inflation expectations remain well-anchored".
However, he said that "potential electricity rate adjustments and possible tariff increases on rice imports pose some risks, but these risks look limited." The risks to the inflation outlook are limited as price pressures are expected to ease.
The BSP's Monetary Board also noted that the near-term outlook for domestic economic growth has weakened.
According to the BSP, the outlook reflects in part the impact on business confidence of governance concerns about public infrastructure spending. Indications of moderating demand also reflect lingering uncertainty from the external environment.
