Philippines Monetary Policy


Philippines: Central Bank leaves key policy rate unchanged

October 23, 2014

At its 23 October monetary policy meeting, the Central Bank left its Reverse Repurchase Rate unchanged at 4.00%. This move represents a pause following two consecutive rate hikes. 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 said that it held rates steady because it projects that inflation will be within the target range for the policy horizon. In addition, the Bank noted that lower inflation projections for 2014 to 2016 suggest that pressures on commodity prices eased, and inflation expectations remained broadly stable and in line with the inflation target. Furthermore, monetary policy authorities stressed that, “adequate domestic liquidity and robust bank lending growth,” were supportive to domestic demand.

Moreover, the Bank pointed out that, “risks to the inflation outlook are broadly balanced,” as potential price pressures arising from possible increases in utility rates and power shortages are mitigated by subdued global economic growth prospects. The next monetary policy meeting is scheduled for 11 December.

FocusEconomics Consensus Forecast panelists see the Reverse Repurchase rate at 3.96% in 2014. For 2015, panelists expect the Reverse Repurchase rate to rise to 4.29%.

Author: Teresa Kersting, Economist

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Philippines Monetary Policy Chart

Philippines Monetary Policy October 2014

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

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