Philippines Monetary Policy


Philippines: Central Bank keeps rate steady again

March 26, 2015

At its 26 March monetary policy meeting, the Central Bank left its Reverse Repurchase Rate unchanged at 4.00%. This is the fourth time the bank has decided to maintain the rate after hiking it at two consecutive meetings. The Central Bank also decided to maintain the reserve requirement ratio 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 its decision was based on the assessment that, “the inflation environment remains manageable.” The Bank expects inflation to rest in the lower half of its 2.0% to 4.0% target range throughout 2015 and 2016 and pointed out that inflation expectations were well-anchored. In the Bank’s view, risks to the inflation outlook are largely balanced: pending adjustments in utility rates and likely power shortages constitute the main upside risks, while an uneven global economic recovery, which might hold back commodity prices, constitutes a main downside risk. As for the domestic economy, the Bank stated that domestic demand was healthy thanks to solid private demand, sufficient domestic liquidity and positive business sentiment. In addition, the Bank expects public spending to add to GDP growth going forward.

The next monetary policy meeting is scheduled for 23 April.

FocusEconomics Consensus Forecast panelists see the Reverse Repurchase rate at 4.12% in 2015. For 2016, panelists expect the Reverse Repurchase rate to rise to 4.57%.

Author: Teresa Kersting, Economist

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Philippines Monetary Policy Chart

Philippines Monetary Policy March 2015

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

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