Philippines: Central Bank cuts policy rate by 25 basis points
July 26, 2012
At its 26 July monetary policy meeting, the Central Bank cut its Reverse Repurchase rate by 25 basis points to a new record low of 3.75%. The decision surprised the market, which had expected the policy rate to remain unchanged. According to the Central Bank, the Monetary Board's decision is based on its assessment that price pressures have been receding, with risks to the inflation outlook slightly skewed to the downside. The move represented the third interest rate cut so far this year. The Central Bank stated that the domestic economy continues to be propped up by solid private consumption. At the same time, it warned that weakening global economic activity represents the biggest risk to Philippines' macroeconomic outlook going forward. Regarding price developments, monetary authorities reaffirmed that inflation will settle within the lower half of their target of 4.0% plus/minus 1.0% in both 2012 and 2013.