Philippines Monetary Policy February 2016


Philippines: Central Bank keeps rate unchanged in first meeting of the year

February 12, 2016

In its first monetary policy meeting of this year, on 12 February, 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. Moreover, the Bank kept the reserve requirement ratio steady.

The Central Bank noted that it expects inflation to be within its target range of 3.0% plus/minus 1.0 percentage points this year and that inflation expectations are well-anchored. In the Bank’s view, inflationary pressures continued to abate recently due to the oil price drop. Regarding the domestic economy, monetary authorities expect that GDP growth will remain dynamic, fueled by healthy private demand, lending and positive business sentiment. The Bank assessed that the risks to the inflation forecast are broadly balanced, with potential price pressures emerging from possible power shortages and utility rate hikes and potential deflationary dynamics emerging from slower-than-expected global economic growth. The next monetary policy meeting is scheduled for 26 March.

FocusEconomics Consensus Forecast panelists see the Reverse Repurchase rate at 4.17% at the end of 2016. For 2017, panelists expect the Reverse Repurchase rate to rise to 4.43%.

Author: Teresa Kersting, Economist

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Philippines Monetary Policy Chart

Philippines Monetary Policy February 2016

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

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