Philippines Monetary Policy


Central Bank holds rates again, reiterates manageable inflation environment

At its 6 February monetary policy meeting, the Central Bank left its Reverse Repurchase Rate unchanged at 3.50%, a decision that was widely expected by the market. The rate has been kept at this level since October 2012. At the same time, the Bank decided to keep interest rates stable on its Special Deposit Accounts (SDA) facility. 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 of manageable inflation." The Bank recognized that inflation forecasts have risen slightly due to higher food prices as a result of the effects of the recent typhoon, but it expects that the path of inflation will fall within the target range of 4.0% plus or minus 1.0% for 2014. In terms of the broader economic environment, the Bank acknowledged rising uncertainty in the global economy due to the policy adjustments the U.S. has made. However, the Bank is confident that the domestic economy will stay strong, with support from, "sound fundamentals such as buoyant demand, strong fiscal and external positions as well as favorable consumer and business sentiment."

Consensus Forecast panelists see the Reverse Repurchase rate at 3.86% in 2014. For 2015, panelists expect the Reverse Repurchase rate to rise to 4.31%.

Author:, Economist

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Philippines Monetary Policy Chart

Philippines Monetary Policy February 2014

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

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