THE Monetary Board on Thursday, February 8, kept the interest rate on the Bangko Sentral ng Pilipinas (BSP) overnight reverse repurchase (RRP) facility steady at 3 percent despite the higher inflation.
The corresponding interest rates on the overnight lending and deposit facilities were also unchanged.
In a statement, the board said inflation is expected to moderate and settle within the inflation target range of 3.0 percent ± 1.0 percentage point in 2019.
The board also said "prospects for domestic activity continue to be firm on the back of robust domestic demand, manageable growth in credit and liquidity, and a sustained recovery in global economic growth."
Read: ,a href="http://www.bsp.gov.ph/publications/media.asp?id=4609" target="_blank" > Full Statement of the Monetary Board
The inflation rate accelerated to 4 percent in January 2018, higher than the 3.3 percent posted in December 2017 and the 2.7 percent in January 2017.
This also hit the upper band of the government’s 2-4 percent target range for the year.
Both Socioeconomic Planning Secretary Ernesto Pernia and Bangko Sentral governor Nestor Espenilla Jr. attributed the uptick partly to the newly enacted Tax Reform for Acceleration and Inclusion (Train) law.
“The push in inflation is partly due to Train, considering particularly the excise on fuel and additional sin taxes,” Pernia said in a statement on Tuesday, February 6.
Espenilla traced the increase mainly to the surge in prices of food and non-alcoholic beverages, alcoholic beverages and tobacco items as well as domestic petroleum products due to the Train law.
"At the same time, transport inflation also increased due to adjustments in gasoline and diesel prices, largely influenced by higher international prices of crude oil and the excise tax on petroleum as prescribed by the Train Law," Espenilla said. (MVI/SunStar Philippines)