The Bangko Sentral ng Pilipinas plans to maintain its accommodative policy stance as long as necessary to sustain economic recovery in the face of risks posed by the more virulent Delta variant of COVID-19, Governor Benjamin Diokno said in an economic forum Wednesday.
Diokno said despite signs of gradual economic recovery, risks to growth still loomed from restrictions due to the spread of the COVID Delta variant.
“The Philippines has sustained its position compared with rating peers because of the strengthening of its fiscal metrics ahead of the pandemic shock. Nevertheless, the country’s road to recovery will not be easy. We will continue to monitor recent developments, here and abroad, and assess their impact on the inflation outlook, financial stability and growth,” he said.
He said BSP was resolute to staying the course amid the COVID-19 pandemic by maintaining price stability, bolstering the financial sector, strengthening resilience against external shocks and supporting the government in addressing the current crisis and ensuring stronger recovery post-COVID.
He said sustained targeted fiscal initiatives and monetary policy support for domestic demand would help boost market confidence and economic recovery to gain more traction.
Diokno said the key to a sustained economic rebound is the acceleration of the government’s vaccination program.
“Looking ahead, the BSP is committed to support the economy for as long as needed to ensure its strong and sustainable recovery. The BSP will also remain vigilant against any emerging risks to the outlook for inflation and growth and will adjust its policy settings as needed to safeguard its price and financial stability objectives,” he said.
The Monetary Board, the policy-making body of Bangko Sentral, kept the record-low policy interest rate of 2 percent on June 24, taking into account the expected manageable inflation trajectory in the coming months.
The interest rates on the overnight deposit and lending facilities were likewise kept at 1.5 percent and 2.5 percent, respectively.
Latest inflation forecasts indicate that the average inflation would likely settle near the upper end of the target range of 2 percent to 4 percent in 2021.