The Bangko Sentral ng Pilipinas (BSP) Monetary Board (MB) decided to keep interest rates unchanged, as announced on Thursday.
The target reverse repurchase rate will remain at 6.5%, marking the sixth consecutive time since the off-cycle policy rate hike in October 2023 to address supply-side inflation pressures.
BSP Governor Eli Remolona mentioned that the risks of inflation are now leaning downwards due to the reduction of rice tariffs. This reduction was a result of President Ferdinand Marcos Jr. signing Executive Order No. 62 on June 20, which aimed to adjust tariff rates on various products to ensure a continuous supply of goods and protect the purchasing power of Filipinos.
Despite this positive development, Remolona acknowledged that other factors such as higher prices of food items, transportation charges, and electricity rates could still pose potential risks to inflation.
In a press release, the BSP also noted that inflation is nearing the midpoint of the 2% to 4% target range. The BSP revised its inflation forecasts to 3.1% for both 2024 and 2025, down from the previous estimates of 3.8% and 3.7%, respectively.
With this decision by the MB, interest rates on overnight deposit and lending facilities will remain at 6.0% and 7.0%, respectively. These rates are currently at their highest level in over 17 years, following a series of rate hikes by the BSP from May 2022 to October 2023.
