MANILA - The Bangko Sentral ng Pilipinas on Thursday kept the key interest rate at a record-low 2.25 percent as the economy continues to gradually reopen following the lockdowns to curb the spread of the virus.
The Monetary Board decided to keep interest rates used by banks to price loans steady in its second straight meeting, after a cumulative cut of 175 basis points this year to ease the impact of the pandemic.
"The Monetary Board’s decision is based on the assumption that the prevailing monetary policy settings remain appropriate," BSP Gov. Benjamin Diokno said.
Diokno said the Monetary Board has also observed "encouraging signs of recovery" in domestic economic activity, supported by ample liquidity.
Global economic activity has also "stabilized," he said, however, uncertainty remains as COVID-19 cases surge in some territories.
"Given these considerations, the MB is of the view that a continued pause would allow prior measures at the BSP to further work their way to the economy," he said.
Diokno earlier said monetary policy works with a lag and the pause would give the market time to absorb the effect of previous rate cuts.
The gradual easing of restrictions and government's efforts to protect human health and livelihood should also boost market sentiment and "aid in recovery of the economy in the succeeding months," Diokno said.
The Philippines fell into recession after the gross domestic product shrank 16.5 percent in the second quarter. The economy could shrink to as much as 5.5 percent this year, government estimates showed.