BSP still has room to keep key rates

he Bang o Sentral ng Pilipinas still has room to eep ey policy rates steady as inflation is expected to remain within target, BSP Deputy Governor Diwa C. Guinigundo said yesterday.

here is still room ut it s getting nar rower,” Guinigundo told reporters.

he BSP has kept its overnight borrowing and overnight lending rates at . percent and . percent, respectively.

It is not that the monetary authorities are reluctant to increase interest rates but why would you increase interest rates at this point when inflation rate is still within the target,” Guinigundo said.

ou have to e amine the numbers very carefully and see what is going to happen in case an ad ustment in policy is undertaken by the authorities,” he continued.

he BSP official e plained that there are many options to address challenges faced by monetary authorities.

or e ample, Guinigundo said, e cessive li uidity in the system may be dealt with ad ustments in the banks’ reserve re uirement instead of tweaking policy rates.

e have to be careful because we don’t want to ad ust our monetary policy levers and affect the entire economy in the process because of the continuing global uncertainty,” Guinigundo said.

he BSP will revisit policy settings on arch .

eeping prices stable remain the primary mandate of the central bank and as long as this is seen settling within the target range, Guinigundo said, the board will have space to ad ust key policy rates.

Inflation last year averaged three percent, at the low end of the BSP’s three to five percent target range.

In ebruary, the rate slid to . percent from a two-year high of . percent in anuary. he BSP e pects the rate to average . percent this year, above the midpoint of its three to five percent target range.

here is still a lot of uncertainty in the global economy and the financial markets continue to be volatile,” Guinigundo said, noting uncertainty still stems from the S ederal eserve’s actions.

here is going to be a sharp ad ustment in global interest rates and there would be some heat as far as domestic economy is concerned,” he continued.