Philippines Monetary Policy


Central Bank keeps benchmark rate unchanged in April

At its 25 April monetary policy meeting, the Central Bank left its Reverse Repurchase rate unchanged at 3.50%, in a decision widely expected by the market. At the same time, the Bank decided to further lower interest rates on its Special Deposit Accounts (SDA) facility, cutting the rate by 50 basis points to 2.00%. SDA facilities are fixed-term deposit accounts by banks and bank trust entities within the Central Bank with maturities between one week and one month.

According to the Central Bank, "the Monetary Board's decision to maintain the policy interest rates at their current levels is based on its assessment that the inflation environment over the policy horizon is likely to remain manageable, with expectations firmly anchored within the inflation target band".

Moreover, monetary authorities stated that the current low inflation environment and high growth rates provide space for further cuts on SDA facilities. According to the Bank, the cuts will allow redirecting funds parked in the deposits to more efficient investments in the real sector.

Consensus Forecast panellists see the Reverse Repurchase rate at 3.69% in 2013. For 2014, panellists expect the Reverse Repurchase rate to rise to 4.14%.


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Philippines Monetary Policy Chart

Philippines Monetary Policy April 2013

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

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