Philippines Monetary Policy


Central Bank holds rates again in October citing benign inflation environment

At its 24 October monetary policy meeting, the Central Bank left its Reverse Repurchase Rate unchanged at 3.50% for the 13th consecutive month, a decision 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 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 of a benign inflation environment." Price pressures and inflation risk are limited given a high absorptive capacity in the economy. According to the Bank, inflation is expected to remain within the target range of 4.0% plus or minus 1.0% in 2013 as well as in 2014. Moreover, it stated that inflation is expected to remain well anchored going forward. In terms of the broader economic environment, the Bank mentioned that, "prospects for domestic activity remain robust, 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 October 2013

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

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