Monetary Board's Steady Policy Rates Vital To Economic Recovery

Last May 12, a day after the Philippine Statistical authority (PSA) reported that the country’s gross domestic product (GDP) contracted by 4.2 percent in the first quarter of the year, the Monetary Board (MB) of the Bangko Sentral ng Pilipinas (BSP) “decided to maintain the interest rate on the BSP’s reverse repurchase policy at 2.0 percent.” Moreover, the BSP said: “The interest rates on the overnight deposit and lending facilities were kept at 1.5 percent and 2.5 percent, respectively.” Previously this year, on March 25 and February 11, the MB promulgated a similarly worded resolution.

In a press statement, the MB said it was keeping “policy settings steady” considering that price pressures on food commodities are abating with improved weather conditions, the impact of Executive Orders No. 128 and 133, s. 2021, and the implementation of direct non-monetary interventions to alleviate supply constraints.”

Executive Orders No. 128 and 133, s. 2021, refer to President Duterte’s issuances liberalizing pork imports by raising the minimum access volume (MAV) to offset the reduction in pork supply arising from the outbreak of African Swine Flu in many regions of the country. Targeted at two to four percent for 2021, the inflation rate has slowed somewhat to 3.9 percent, down from the previous 4.2 percent.