Philippine central bank keeps target reverse repurchase rate unchanged

19 Feb '24

2 min read

Philippine central bank keeps target reverse repurchase rate unchanged

Insights

The Philippine central bank has kept its target reverse repurchase rate unchanged at 6.5 per cent.
The interest rates on the overnight deposit and lending facilities were kept at 6 per cent and 7 per cent.
The inflation outlook was broadly unchanged and inflation expectations were found to be more firmly anchored.
The medium-term growth momentum is intact.

The Philippine central bank’s (BSP) monetary board recently decided to keep its target reverse repurchase (RRP) rate unchanged at 6.5 per cent. The interest rates on the overnight deposit and lending facilities were kept at 6 per cent and 7 per cent.

The outlook for inflation was broadly unchanged, the board noted.

The latest risk-adjusted inflation forecast for this year eased to 3.9 per cent from 4.2 per cent in the previous meeting in December, the central bank said in a release. For 2025, the forecast is relatively steady at 3.5 per cent from 3.4 per cent.

BSP’s survey shows inflation expectations to be more firmly anchored, with mean forecasts remaining within the target range for both 2024 and 2025.

Meanwhile, the risks to the inflation outlook have receded, but remain tilted toward the upside. The upside risks to the inflation forecasts are linked mainly to higher transport charges, increased electricity rates, higher oil and domestic food prices, and the additional impact on food prices of a strong El Nino episode.

The sustained expansion in output in the fourth quarter last year reaffirms the BSP’s view that the country’s growth momentum remains intact over the medium term.

However, recent indicators also suggest that economic activity could moderate in the near term as the full impact of the BSP’s prior monetary policy tightening continues to manifest.

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