The measures taken by the ECB have eased banks’ balance sheet constraints and thereby certainly helped to avoid a sudden collapse in the supply of credit and the emergence of a systemic crisis. Moreover, in line with the substantial weakening of global demand and economic activity, inflationary pressures and risks have been diminishing.
What is BSP’s view on the inflation outlook? In our Third Quarter Inflation Report, released in October, we noted that our short run prognosis points to subdued supply pressures and uneven demand conditions. Subsequently, on November 2, the monetary board decided to maintain the BSP’s key policy rates.