, equivalent to about 10 percent of gross domestic product ( gdp ), in liquidity to the economy. we implemented policies for micro, small, and medium enterprises ( msmes ), such as counting loans to this sector as part of banks ’ compliance with the reserve requirement. we rolled out time - bound regulatory relief measures to manage the impact of the crisis on banks ’ balance sheets. and, we implemented liquidity - enhancement measures to keep the financial system stable, boost 1 / 3 bis central bankers'speeches market confidence, and allow the national government to promptly fund its response measures. when domestic developments warrant, the bsp will move toward smooth normalization of our time - bound measures, consistent with our data - driven approach to monetary policy. latest baseline forecasts show inflation – which averaged 2. 6 percent in 2020 – will remain within the 2. 0 - 4. 0 percent target range this year and in 2022. this will provide an enabling environment for investments and consumption growth, and space for the bsp to further support growth, if necessary. last year, we cut policy rates by a cumulative 200 basis points. the bsp was in fact among the first central banks to respond to the crisis by cutting rates as early as february last year. last month, the bsp ’ s monetary board maintained the key policy rate at 2. 0 percent. accommodative monetary policy, together with fiscal initiatives, should quicken the economy ’ s recovery. looking ahead, we see solid rebound in 2021. we expect : • the economy to grow anywhere between 6. 5 and 7. 5 percent ; we have started to see some green shoots, including growth in remittances and foreign direct investments ; • inflation to remain within target ; • exports and imports to grow ; • net inflow of fdis to increase ; and • remittances to rise. i would like to highlight that remittances had demonstrated resilience, declining by a mere 0. 9 percent in the first ten months of 2020, hence our optimistic forecast for this year. • external accounts to remain healthy — with the gross international reserves staying above usd 100 billion and a current account surplus. in addition, the banking sector — which enjoyed regulatory relief measures from the bsp and with an enabling law to get rid of bad assets ( fist ) — will remain strong and stable. the philippine banking system continues to have capitalization and liquidity levels well above the regulatory requirements, while non -

this approval, the rbap will take a leadership role in the qualification or screening process of participating banks that wish to offer housing microfinance. this develops a strong sense of product ownership and makes the process more efficient. also this year, we issued circular 683 authorizing rural banks to market, sell and service micro insurance products, subject to certain prudential rules and regulations. this enables rural banks to deliver a full range of financial services needed by your clients, which may include protection against injury, loss of property, and other contingent events. this is a groundbreaking policy that places rural banks on the same footing as universal banks which previously held this business. the bangko sentral has also issued this year circular 685 covering the rules and regulations in recognizing microfinance institutional rating agencies. this is important as the use of objective, credible, and competent third - party ratings of microfinance institutions enhances transparency and possible inflow of resources into the industry. altogether, this should facilitate the further growth and development of microfinance in the philippines which has proven to be an effective medium for liberating millions of filipinos from poverty. ladies and gentlemen of the rbap, all these policies are in place and the opportunities this brings are well within your reach. all you need to do is to continue to strengthen your institutions by aligning governance practices with global standards, strengthening your capital positions, putting in place a proactive risk management system, improving business operations and following industry best practices. i also wish to say that the bangko sentral ng pilipinas remains responsive to issues raised by rbap, including those pertaining to the implementation of certain policies. take for instance circular no. 688 issued only last week – may 26 to be exact – implementing the revised risk based capital adequacy framework for stand - alone thrift, rural and cooperative banks or the so - called basel 1. 5 framework. unlike the full basel 2 framework for universal and commercial banks and their subsidiary banks and quasi - banks, the basel 1. 5 framework involves only a few key changes on the existing framework under circular no. 280 dated march 29, 2001, as amended. the main changes include the increase in risk weight from 0 % to 100 % for foreign currency denominated exposures to the philippine national government and the bangko sentral. the increase in risk weight shall be phased - in over a three year period : that is, 1 / 3 of the applicable risk weight shall be