The policy-making Monetary Board of the Bangko Sentral ng Pilipinas (BSP) on Monday held its benchmark interest rate, also known as target reverse repurchase (RRP) rate at 6.50 percent for the fourth time in a series, meeting market expectations.
As consequence, the interest rates on the overnight deposit and lending facilities also remain at six percent and seven percent, respectively.
The seven-man MB noted the latest inflation path has shifted slightly higher but remains within target.
“The risk-adjusted inflation forecast for 2024 has risen to 4 percent from 3.9 percent in the previous meeting. For 2025, the risk-adjusted inflation forecast is unchanged at 3.5 percent,” the BSP said.
The headline print picked up in March to 3.7 percent on account of climbing food prices.
According to the BSP, 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.”
BSP
It noted that while upside risks to inflation have raised inflation expectations, these expectations have remained broadly anchored.
The MB also said 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 Monetary Board deems it appropriate to maintain the BSP’s tight monetary policy settings. The BSP also continues 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.
