Philippines holds policy rate steady as inflation appears in check

By Susanna Moon

Chicago, Aug. 25 - The Monetary Board of the Bangko Sentral ng Pilipinas decided to leave the policy rate unchanged at its most recent meeting in light of contained inflation expectations, according to minutes of the bank meeting on July 28.

The bank decided to maintain its overnight borrowing rate at 4½% and its overnight lending rate at 6½% at its meeting in July. The board also raised the regular reserve requirement by 100 basis points effective Aug. 5.

The latest inflation forecasts are in line with the 3% to 5% target for 2011 and 2012, and global commodity prices appear to have stabilized, the bank noted.

Headline inflation rose to 4.6% in June, using the 2000-based Consumer Price Index, up from 4.5% in May. Meanwhile, the rate was 5.2% in June, using the 2006 CPI, up from 5% in May.

Core inflation using the 2000 CPI rose to 4% in June from 3.7% in May.

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