MANILA -- (UPDATE) The Bangko Sentral ng Pilipinas kept the benchmark interest rate steady during its last policy meeting for the year, as it weighed the impact of previous actions on the economy.
The BSP cut the overnight borrowing rate thrice this year for a total of 75 basis points, bringing it to 4 percent. It also slashed 400 basis points off the RRR or reserve requirement ratio for banks.
BSP Governor Benjamin Diokno said the central bank's Monetary Board based its decision on its assessment of a benign inflation environment.
Inflation crept up to 1.3 percent in November due to the waning effect of a high base from the previous year. It was still below the central bank's 2 to 4 percent target.
BSP Assistant Governor Iluminada Sicat said inflation is expected to average 2.4 percent in 2019 and 2.9 percent for 2020 and 2021.
While global economic growth is expected to be slower in the coming year, Diokno said the country's economy remains strong thanks to domestic consumption, government spending and recent rate cuts.
"Notwithstanding the weak global growth outlook prospects for the Philippine economy continue to be robust on the back of firm domestic demand, sustained policy support from increased fiscal spending as well as improved domestic liquidity conditions owing to recent monetary adjustments," Diokno said.
Diokno earlier signaled that the central bank was done easing policy for the year.
An analyst meanwhile said he expects the BSP to resume monetary easing next year.
Unionbank chief economist Carlo Asuncion said the central bank will likely cut its policy rate by 50 basis points, and the RRR by another 200 basis points in 2020.