Philippines Monetary Policy


Central Bank holds rates steady in July

At its 25 July monetary policy meeting, the Central Bank left its Reverse Repurchase rate unchanged at 3.50%, a decision widely expected by the market. 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 offered by the Central Bank to credit institutions and bank trust entities with maturities between one week and one month.

The Central Bank stated that, "the Monetary Board's decision is based on its assessment that the inflation environment remains benign." According to the Bank, inflation is expected to remain within target over the policy horizon, as upward pressures on commodity prices are likely to be subdued due to weak global economic activity.

The Philippine economy, supported by domestic demand and an increase in domestic liquidity and bank lending, continues to gain strength. Nevertheless, the financial market's current volatility due to the tapering of quantitative easing (QE) in developed countries suggests that caution should be taken when assessing the policy stance.

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 July 2013

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

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