The Bangko Sentral ng Pilipinas (BSP) may not opt to adjust its key interest rates following the low inflation rate for March, BSP Gov. Rafael B. Buenaventura said yesterday.
The National Statistics Office (NSO) reported yesterday that the nationwide inflation rate remained within the government expectations at 3.3 percent.
"The March inflation figure was well within our expectations," Buenaventura said, adding that "there may be no need after all to adjust the overnight borrowing and lending rate."
Buenventura, however, said the Monetary Board will still carefully monitor the movement of the peso against the dollar and other vital factors before it makes a final decision on Friday on whether or not to adjust its key overnight policy rates.
At the Philippine Dealing System (PDS), the peso showed no signs of retreating back below the P41 to the dollar level, closing at P41.130 to the dollar.
Buenaventura reiterated that the BSP is not intervening and is merely allowing market forces to determine the rate.
Foreign exchange dealers, on the other hand, said the BSP is exerting its influence to prevent a further deterioration of the peso.
Buenaventura pointed out that the lower inflation rate might have also influenced the market to finally moderate its attack on the peso.
Based on the BSP's new policy on inflation targeting, it would therefore mean that the BSP will program its monetary and interest rate policy on maintaining the low inflation figure and not focus on controlling the foreign exchange rate. -- Marianne Go