The central bank on Thursday kept its key interest rates unchanged — in line with market expectations — saying the Philippine economy needed time to digest the P1.3 trillion in liquidity. | daxINQ
Diokno described the balance of risks to the inflation outlook as “leaning toward the downside from 2020 until 2022”, owing largely to potential disruptions to domestic and global economic activity amid the ongoing pandemic.During its meeting on Thursday, the Monetary Board noted that the outlook for global economic growth remained subdued and uncertain amid a resurgence in COVID-19 cases in many areas.
The seven-member group also noted the sharp contraction in domestic output in the first half of 2020, reflecting the impact of the enforcement of necessary measures to contain the spread of the virus in the country. At the same time, Diokno said the Monetary Board “observed early signs of recovery in domestic economic activity with the gradual easing of lockdown restrictions, supported by ample liquidity in the financial system.”
“Given these considerations, the Monetary Board is of the view that monetary policy settings remain appropriate for the time being,” the central bank chief said. He added that “a prudent pause” will enable the cumulative 175-basis-point reduction in the policy rate as well as other monetary and regulatory relief measures by the BSP to fully work their way through the economy, even as the national government continues to implement interventions to bolster economic activity and protect human lives and livelihoods.
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