Benign inflation environment and optimism on the delivery of coronavirus disease (Covid-19) vaccines provided a leeway for the policy-making Monetary Board to keep the Bangko Sentral ng Pilipinas (BSP) key rates steady Thursday.

This kept the BSP’s overnight reverse repurchase (RRP) facility rate at 2 percent, the overnight lending rate at 2.5 percent, and the overnight deposit facility rate at 1.5 percent.

BSP Governor Benjamin Diokno, in a briefing aired over the central bank’s Facebook page, said the inflation environment remains benign even with the latest uptick in food inflation, which is expected to be transitory, and the rise in global oil prices.

He said inflation is seen to remain with the government’s 2- to 4-percent target band until 2022.

“The balance of risks to the inflation outlook also leans toward the downside from 2020 to 2022 owing largely to potential disruptions to domestic and global economic activity amid the ongoing pandemic,” he said.

Diokno said the Monetary Board also cited the rise in the number of Covid-19 infections globally, which tempers economic activity because of the movement restrictions.

“However, optimism over the delivery of vaccines has lifted market confidence, supporting improved prospects for global growth,” he said.

On the local front, Diokno said the impact of the recent calamities “could pose strong headwinds to growth.”

“The further easing of quarantine measures should help facilitate the recovery of the economy in the coming months,” he said. “Given these considerations, the Monetary Board is of the view that monetary policy settings remain appropriate. The Monetary Board believes that an accommodative monetary policy stance, together with sustained fiscal initiatives to ensure public welfare, should quicken the economy’s transition toward a sustainable recovery.”

Meanwhile, the recent upticks in the rate of price increases made the Monetary Board revise upwards the BSP’s 2020 average inflation forecast from 2.4 percent last November to 2.6 percent and the 2021 projection from 2.7 percent to 3.2 percent.

On the other hand, the 2022 forecast remains at 2.9 percent.

BSP Deputy Governor Francisco Dakila Jr., during the same presser, said higher food and oil prices were the primary reasons for the revision.

“It can be noted that the baseline forecasts remain comfortably within the target band so the outlook can be described as continuing to be benign,” he said. CURRENTPH