BSP Holds 6.50% Policy Rate Unchanged

On its first rate-setting meeting this 2024, the Monetary Board of the Bangko Sentral ng Pilipinas (BSP) retained its Target Revenue Repurchase (RRP) Rate at 6.50 percent amid improvement in inflation conditions. Accordingly, the interest rates on the overnight deposit and lending facilities were maintained at 6.0 percent and 7.0 percent, respectively.

 

According to the Monetary Board, the latest risk-adjusted inflation forecast for 2024 has declined to 3.9 percent from 4.2 percent, and the risk-adjusted inflation forecast for 2025 has remained unchanged at 3.5 percent from 3.4 percent.

 

On domestic activity, the Monetary Board stated that the country’s growth momentum over the medium term remains intact with government measures to mitigate the impact of El Niño in domestic output, improving real wages, and more favorable global economic growth. Consequently, these efforts offset the effects of higher transport charges, increased electricity rates, and higher prices of domestic products induced by El Niño.

 

However, the Monetary Board also noted that the full brunt of BSP’s monetary policy tightening could disrupt economic activity in the near term.

 

Consequently, the Monetary Board deemed it necessary to tighten monetary policy settings as well as continue to support the National Government’s non-monetary measures to address supply-side pressures on prices and sustain the disinflation process.

 

To safeguard price stability, the BSP stands ready to adjust monetary policy settings as necessary should there be heightened risks of higher inflation.

 

The full press release can be accessed here.

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