Philippines Monetary Policy


Philippines: Central Bank stays put

December 11, 2014

At its 11 December monetary policy meeting, the Central Bank left its Reverse Repurchase Rate unchanged at 4.00%. This is the second time the bank decided to maintain the rate after having hiked the rate 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.

According to the Central Bank, the current rates were appropriate given, “the manageable inflation outlook and favorable domestic growth prospects.” The Bank pointed out that, driven by a weak outlook for international commodity prices, inflation projections for 2014 to 2016 fell a bit compared to the last monetary policy meeting and that inflation expectations remain in line with the target rate and broadly balanced. Moreover, the Bank expects that, despite Q3’s slowdown in economic growth, going forward economic growth will be supported by, “strong domestic demand, robust bank lending growth, and buoyant business sentiment.” However, regarding international developments, the Central Bank foresees challenging global economic conditions. The next monetary policy meeting is scheduled for 12 February 2015.

FocusEconomics Consensus Forecast panelists see the Reverse Repurchase rate at 4.43% in 2015. For 2016, panelists expect the Reverse Repurchase rate to rise to 4.72%.

Author: Teresa Kersting, Economist

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Philippines Monetary Policy Chart

Philippines Monetary Policy November 2014

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

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