Philippine Central Bank Maintains Policy Rate At 6.25%

(RTTNews) - The Bangko Sentral Ng Pilipinas left its key rate unchanged for the fourth straight meeting on Thursday, and the policy board deemed it appropriate to maintain its pause amid the emerging upside risks to the inflation outlook.

The BSP Monetary Board, led by Governor Eli Remolona, decided to maintain the interest rate on the overnight reverse repurchase facility at 6.25 percent. That was in line with expectations.

The previous rate change was a 25 basis point hike in March.

Interest rates on the overnight deposit and lending facilities were kept at 5.75 percent and 6.75 percent, respectively.

The central bank affirmed that it stands ready to resume its tightening actions in the face of upside risks and potential second-round effects that could dislodge inflation expectations.

Recent official data showed that consumer price inflation rose to 5.3 percent in August from July's 16-month low of 4.7 percent, which was still above the central bank's target range of 2 to 4 percent.

Latest projections show a higher inflation path, the bank said.

Inflation is still projected to revert to the 2 to 4 percent target range by the fourth quarter of this year in the absence of further supply-side shocks. Underlying price pressures have eased and inflation expectations remain anchored to the target range over the policy horizon, the bank said.

Inflation is predicted to average 5.8 percent this year, up from 5.6 percent previously, while it is predicted to rise to 3.5 percent in 2024, the bank said in a statement.

The Monetary Board noted that recent indicators of domestic economic activity pointed to waning pent-up demand, even as the impact of prior monetary policy tightening continues to weigh on credit.