The Indicator lending rate (ILR) set by commercial banks is bound to decrease as the Central Bank will keep the kina facility rate (KFR) at 7% this month.
With Bank of PNG's KFR at a low of 7%. the next immediate action is that the banks and licensed deposit-taking institutions will reduce their lending rates.
According to BPNG's recent statistics, when the KFR is low, the inflationary pressures continue to decline.
BPNG will ease its monetary policy similar to that of last month when the KFR was also at 7% after a reduction by 1% from 8%. KFR is a rate set by the Central Bank and is a measure of control of its monetary policy.
There is hope that the inflationary pressure might continue to decrease.
However, the construction phase of the ExxonMobil - led PNG liquefied natural gas project and other activities in the country might give rise to imported inflation.