The Philippine Monetary Board, at its meeting earlier this week, has decided to retain the Bangko Sentral ng Pilipinas (BSP)’s Target Reverse Repurchase (RRP) rate at 6.5 per cent.
Thus, the interest rates on the overnight deposit and lending facilities shall remain at 6 and 7 per cent, respectively.
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According to the BSP, the latest inflation path has shifted slightly higher but remains within target.
The risk-adjusted inflation forecast for 2024 has risen to 4 per cent from 3.9 per cent in the previous meeting. For 2025, the risk-adjusted inflation forecast is unchanged at 3.5 per cent.
The risks to the inflation outlook continue to lean toward the upside.
Possible further price pressures are linked mainly to higher transport charges, elevated food prices, higher electricity rates, and global oil prices.
Potential minimum wage adjustments could also give rise to second-round effects.
The Philippine Monetary Board also noted that while the upside risks to inflation have raised inflation expectations, these expectations remain broadly anchored.
Meanwhile, the latest demand indicators suggest that domestic growth prospects remain largely intact over the medium term, even as overall activity continues to gradually respond to tighter financial conditions.
Given these considerations, the Philippine Monetary Board deemed it appropriate to maintain the BSP’s tight monetary policy settings.
The BSP will also continue to support the national government’s policies and programs to address supply-side pressures on the prices of key food commodities.
The BSP remains ready to adjust its monetary policy settings as necessary, in keeping with its primary mandate to safeguard price stability.
