Philippines Monetary Policy March 2016


Philippines: Central Bank holds rate in March

March 23, 2016

In its monetary policy meeting on 23 March, the Central Bank decided to leave its Reverse Repurchase Rate at 4.00% as the markets had expected. The rate has been resting at this level since September 2014. The Central Bank also decided to leave the Repurchase Rate unchanged and to keep the interest rates on its Special Deposit Accounts (SDA) 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 Bank also decided to keep the reserve requirement ratio steady.

The Central Bank stated that it expects inflation to increase and be within its target range of 3.0% plus/minus 1.0 percentage points this year and next. Moreover, in the Bank’s view inflation expectations are well-anchored. The Bank assessed that risks to its inflation forecast were somewhat tilted to the downside due to slower-than-expected global economic growth and the impact of low oil prices. Nevertheless, some upward price pressures may emerge from the impact of dry whether on food and utility prices as well as from pending power rate hikes. Regarding the domestic economy, monetary authorities expect that economic growth will remain robust, fueled by healthy private demand, lending and positive business sentiment. The next monetary policy meeting is scheduled for 12 May.

FocusEconomics Consensus Forecast panelists see the Reverse Repurchase rate at 4.11% at the end of 2016. For 2017, panelists expect the Reverse Repurchase rate to rise to 4.31%.

Author: Teresa Kersting, Economist

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Philippines Monetary Policy Chart

Philippines Monetary Policy March 2016

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

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