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Steady BSP rate seen this year

An economist of the Philippine National Bank is discounting any adjustment in the Bangko Sentral ng Pilipinas’ key policy rates this year, citing a similar path for the Federal Reserve rates.

“Our house view is that the policy rate will remain at 2 percent through 2021,” PNB economist Alvin Joseph Arogo said in a virtual briefing Friday.

To date, BSP’s overnight reverse repurchase (RRP) rate is at a record-low 2 percent.

BSP’s key policy rates have been slashed by a total of 200 basis points last year as part of the central bank’s contribution to help buoy the domestic economy from the impact of the virus-induced pandemic.

Arogo said a hike in the key rates to date is also not advisable since the domestic economy remains fragile and the low credit rate expansion.

“And of course, our central bank also takes its cue from the US, and there is no pressure for the BSP to raise the RRP given the Fed’s decision this week,” he added. 

After the two-day meeting of its Federal Open Market Committee this week, the Fed vowed to keep its target funds rate low, which to date is between 0 to 0.25 percent, even until the next two years to boost economic recovery.*PNA

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