At its meeting held earlier this week, the Philippine Monetary Board decided to maintain the Bangko Sentral ng Pilipinas (BSP)’s Target Reverse Repurchase (RRP) Rate at 6.50 per cent.
The interest rates for the overnight deposit and lending facilities will also remain unchanged at 6.0 and 7.0 per cent, respectively.
Risks to the inflation outlook continue to lean toward the upside, primarily due to potential increases in transport charges, food prices, electricity rates, and global oil prices.
The BSP’s latest forecasts indicate that inflation will settle close to the upper end of the target range. The risk-adjusted inflation forecast for this year has eased to 3.8 per cent from 4.0 per cent in the previous meeting. However, the forecast for 2025 has risen to 3.7 per cent from 3.5 per cent previously.
Despite these adjustments, inflation expectations remain well-anchored.
Tight financial conditions
According to the latest GDP data, the anticipated path for domestic output growth over the medium term remains largely intact, although recent indicators suggest continued moderation under tight financial conditions.
The Monetary Board considers it appropriate to maintain sufficiently tight monetary policy settings until inflation firmly settles within the target range.
A restrictive policy stance will also help keep inflation expectations anchored amid potential upside risks to future inflation.
The Monetary Board reiterates its support for the national government’s non-monetary measures to address persistent supply-side pressures on food prices and to prevent further second-round effects.
Looking ahead, the BSP remains ready to adjust its monetary policy settings as necessary, in line with its primary mandate to safeguard price stability.
