The Bangko Sentral ng Pilipinas’ policy-setting Monetary Board on Thursday kept the overnight borrowing rate unchanged at 6.50 percent.
It also retained the interest rates on overnight deposit and lending facilities at 6.0 percent and 7.0 percent, respectively.
“On balance, the Monetary Board deems it appropriate to hold monetary policy settings steady at this time. The Monetary Board also anticipates price pressures to ease further in the second half of the year with the implementation of Executive Order 62 as well as Administrative Order 20,” BSP Governor and MB chairman Eli Remolona Jr. said.
Remolona hinted at the start of monetary easing in the coming months once inflation continues to fall within the target range of 2 percent to 4 percent.
“If sustained, an improvement in the inflation outlook would allow more scope to consider a less restrictive monetary policy stance. However, uncertainty in the external environment calls for some caution against potential spillovers, including those in the financial markets,” he said.
The BSP said the balance of risks to the inflation outlook shifted to the downside for 2024 and 2025 on the impact of lower rice import tariffs under EO 62, but higher prices of other food items, transport charges and electricity rates continued to pose upside risks to inflation.
It said inflation was moving closer to the midpoint of the target range. The risk-adjusted inflation forecasts eased to 3.1 percent for both 2024 and 2025 from 3.8 percent and from 3.7 percent, respectively. Ralph Harvey Rirao
The BSP said that based on latest survey of market forecasters, inflation expectations remain well-anchored.
Prospects for domestic output growth remain in line with medium-term trends amid favorable labor market conditions and strong net exports, it said.
“Looking ahead, the BSP will ensure that monetary policy settings remain in line with its primary mandate to safeguard price stability conducive to sustainable economic growth,” it said.
