BSP keeps policy rate untouched at 6.5%
MANILA, Philippines — The Bangko Sentral Ng Pilipinas’ Monetary Board has decided to retain its policy rates for November 2023.
On Thursday, the monetary board held steady at a 6.50% benchmark interest rate, citing a recent dip in the country's inflation figures for October.
Meanwhile, the 6.0% to 7.0% interest rates on overnight deposit and lending facilities remained unchanged.
On October 26, the Monetary Board implemented an off-cycle rate hike, raising the target reverse repurchase rate by 25 basis points to 6.5% from 6.25%. This move aimed to “prevent supply-side price pressures from inducing additional second-round effects and further dislodging inflation expectations.”
BSP Deputy Governor Francisco Dakila Jr. said that despite recent improvements in food supply conditions, the overall risks to the inflation outlook continue to predominantly favor the "upside."
“Supply-side inflation pressures continue to ease due in part to the national government’s non-monetary inerventions as well as seasonal factors,” he said in a press conference on Thursday.
The October 2023 inflation rate in the country decreased to 4.9% from September 2023's 6.1%, resulting in a year-to-date inflation of 6.4%.
According to Dakila, keeping the rates unchanged would support the ongoing impact of earlier tightening measures within the economy.
“The Monetary Board continues to deem it necessary to keep monetary policy settings sufficiently tight until a sustained downtrend in inflation becomes fully evident and inflation expectations are firmly anchored,” Dakila said.
“Guided by incoming data, the BSP remains prepared to resume monetary policy tightening as necessary to steer inflation towards a target-consistent path, in line with its price stability mandate,” he added..
Meanwhile, the BSP said the government's 2%-4% inflation rate target is anticipated to be achieved by the second quarter of 2024."
“We’re not out of the woods yet but we’re within striking distance of our target range which is between 4% and 2%,” BSP Governor Eli Remolona said during the Philippine Economic Briefing in San Francisco California.
The retention of the rate hike is expected by experts for the month of November but hunches that another rate hike would happen anytime.
The monetary board’s last policy meeting for 2023 is scheduled for December 14.
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