Philippines Monetary Policy


Philippines: Central Bank leaves rate unchanged again

May 14, 2015

At its 14 May monetary policy meeting, the Central Bank left its Reverse Repurchase Rate unchanged at 4.00%. This is the fifth consecutive meeting in which the bank 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 its decision was based on the assessment that, “that current monetary policy settings remain appropriate given a manageable inflation environment.” The Bank said that inflation expectations were well-anchored and that it sees inflation resting in the lower half of its 2.0% to 4.0% target range both this and next year. In addition, in the Bank’s view the risks to its inflation forecast are balanced. Possible power shortages and pending electricity tariff increases constitute the major upside risks, while subdued global economic growth is the main downside risk.

The Bank sees that the domestic economy is on a solid track, with strong private consumption and business sentiment. In addition, the Central Bank expects that, going-forward, the economy will benefit from increased government spending and ample domestic liquidity. The next monetary policy meeting is scheduled for 25 June.

FocusEconomics Consensus Forecast panelists see the Reverse Repurchase rate at 4.10% in 2015. For 2016, panelists expect the Reverse Repurchase rate to rise to 4.49%.

Author: Teresa Kersting, Economist

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Philippines Monetary Policy Chart

Philippines Monetary Policy May 2015

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

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