The Bangko Sentral ng Pilipinas on Thursday kept the key policy rate steady at 6.25 percent amid the continued slowdown in inflation.
It also retained the overnight deposit and lending facilities at 5.75 percent and 6.75 percent, respectively.
BSP Governor Eli Remolona said the decision considered the lackluster 4.3-percent gross domestic product growth in the second quarter, which brought the first-half expansion to 5.3 percent, below the 6 percent to 7 percent target range for the year.
“The Monetary Board also recognized the challenging outlook for economic growth, as the weaker GDP outturn for the second quarter of 2023 reflected a broad-based slowdown in domestic demand. Household consumption slowed due to elevated commodity prices, while government spending contracted relative to the previous year,” Remolona said.
“Given these considerations, the Monetary Board deemed it appropriate to maintain monetary policy settings to allow a moderation of inflation even as authorities continue to assess the emerging risks to the inflation outlook,” he said.
Remolona said the latest baseline projections continued to show a return to inflation target in the fourth quarter despite a generally higher path for inflation relative to the previous forecast from the monetary policy meeting in June, reflecting mainly the impact of higher international oil prices.