Inflation is seen to stay within its target range of 2.5 to 4.5 percent in 2009 and in 2010 generally in line with the 3.5 to 5.5 percent target. The continuing benign inflation outlook has allowed the BSP to cut its policy rates by a total of 200 basis points since December 2008.
These rate reductions are aimed at bringing down the cost of borrowing and reducing the financial burdens on firms and households. Further, lower policy rates enhance business and consumer confidence that should sustain the momentum for economic expansion. The BSP is happy to know therefore that the SSS has been lowering its interest rates as well.