Philippines Monetary Policy


Philippines: Central Bank expectedly stays put again

September 24, 2015

At its 24 September monetary policy meeting, the Central Bank decided to leave its Reverse Repurchase Rate at 4.00%. This is the eighth consecutive meeting in which the Bank has maintained the rate unchanged. The Central Bank also decided to keep the reserve requirement ratio steady and to leave the interest rates on its Special Deposit Accounts (SDA) unchanged at 2.50%. 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 noted that inflation was muted recently and that it may even fall below the Central Bank’s target range of 1.0 percentage point around its 3.0% target in the near term. However, the Bank sees inflation picking up and approaching the target in the next two years. In addition, inflation expectations remain anchored, according to the Bank’s assessment. The Bank noted that upward risks to inflation could emerge from pending increases in power tariffs and if an unexpectedly-strong El Niño weather phenomena leads to higher-than-expected food price inflation. Moreover, the Bank pointed out that global economic growth was muted and that uncertainty prevailed in financial markets. At the same time, in the Bank’s view, demand in the Philippines is solid, supported by strong confidence and abundant liquidity. The next monetary policy meeting is scheduled for 12 November.

FocusEconomics Consensus Forecast panelists see the Reverse Repurchase rate at 4.00% at the end of 2015. For 2016, panelists expect the Reverse Repurchase rate to rise to 4.45%.

Author: Teresa Kersting, Economist

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Philippines Monetary Policy Chart

Philippines Monetary Policy September 2015

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

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