BSP maintains policy settings amid inflation concerns

The Monetary Board has decided to keep the Bangko Sentral ng Pilipinas’ (BSP) Target Reverse Repurchase (RRP) Rate at 6.50 percent following its latest meeting.

Additionally, the interest rates on the overnight deposit and lending facilities remain unchanged at 6.0 percent and 7.0 percent, respectively.

Inflation Risks and Projections

The BSP highlighted ongoing risks to the inflation outlook, primarily driven by higher transport charges, food prices, electricity rates, and global oil prices.

The latest forecasts suggest that inflation will settle near the upper end of the target range.

The risk-adjusted inflation forecast for 2024 has been revised down to 3.8 percent from 4.0 percent in the previous meeting, while the forecast for 2025 has increased to 3.7 percent from 3.5 percent.

Economic Growth and Policy Stance

Based on the latest GDP data, the expected path for domestic output growth over the medium term remains largely intact, despite recent indicators pointing to continued moderation under tight financial conditions.

The Monetary Board emphasized the need for sufficiently tight monetary policy settings until inflation stabilizes within the target range.

The restrictive policy stance aims to keep inflation expectations anchored amid potential upside risks to future inflation.

The Board reiterated its support for the National Government’s non-monetary measures to address persistent supply-side pressures on food prices and prevent further second-round effects.

“Moving forward, the BSP remains ready to adjust its monetary policy settings as necessary, in keeping with its primary mandate to safeguard price stability,” stated the Monetary Board.