The Monetary Board of the Bangko Sentral ng Pilipinas (BSP) on Thursday kept its key interest rates steady to combat inflation.
The Monetary Board said it maintained the overnight borrowing rate at 6.50 percent and the overnight deposit and lending facilities at 6.0 percent and 7.0 percent, respectively.
“The risks to the inflation outlook continue to lean toward the upside. Potential price pressures are linked mainly to higher transport charges, food prices, electricity rates, and global oil prices,” the BSP said.
It said the latest forecasts indicate that inflation would settle close to the upper end of the target range of 2 percent to 4 percent.
The risk-adjusted inflation forecast for 2024 eased to 3.8 percent from 4 percent in the previous meeting.
Meanwhile, the risk-adjusted inflation forecast for 2025 rose to 3.7 percent from 3.5 percent previously. Inflation expectations remain well-anchored.
It said that based on the latest gross domestic product (GDP) data, the expected path for domestic output growth over the medium term remains largely intact, even as recent indicators point to continued moderation under tight financial conditions.
The Philippine economy grew by 5.7 percent in the first quarter of 2024, slower than the government’s target of 6 percent to 7 percent this year.
“The Monetary Board deems it appropriate to ensure sufficiently tight monetary policy settings until inflation settles firmly within the target range,” the BSP said.
“A restrictive policy stance will also help keep inflation expectations anchored amid a possible buildup in upside risks to future inflation,” it said.
The Monetary Board reiterates its support for the national government’s non-monetary measures to address persistent supply-side pressures on food prices and to 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,” it said.
