Philippines Monetary Policy


Central Bank holds rates again, cites manageable inflation environment

At its 12 December monetary policy meeting, the Central Bank left its Reverse Repurchase Rate unchanged at 3.50% for the 14th consecutive month, a decision that was widely expected by the market. At the same time, the Bank decided to keep interest rates on its Special Deposit Accounts (SDA) facility stable. SDA facilities are fixed-term deposit accounts with maturities of between one week and one month that the Central Bank offers to credit institutions and bank trust entities.

The Central Bank stated that, "the Monetary Board's decision is based on its assessment that the inflation environment remains manageable." The Bank recognized that inflation forecasts have risen slightly due to higher oil prices and the effects of the recent typhoon, but it expects that the uptick will be transitory and that inflation will be within the target range of 4.0% plus or minus 1.0% in 2013 as well as in 2014. In terms of the broader economic environment, the Bank reiterated its previous statement that, "prospects for domestic activity remain firm, supported by buoyant domestic demand and favorable consumer and business sentiment."

Consensus Forecast panelists see the Reverse Repurchase rate at 3.50% in 2013. For 2014, panelists expect the Reverse Repurchase rate to rise to 3.98%, which is unchanged from last month's projection.

Author:, Economist

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Philippines Monetary Policy Chart

Philippines Monetary Policy December 2013

Note: Reverse Repurchase Rate in %.
Source: Central Bank of the Philippines (BSP).

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