Philippines Monetary Policy

Philippines

Philippines: Central Bank stays put again

February 12, 2015

At its 12 February monetary policy meeting, the Central Bank left its Reverse Repurchase Rate unchanged at 4.00%. This is the third 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, “prevailing monetary policy settings remain appropriate.” The Bank pointed out that recent inflation projections indicate that inflation will remain within the Bank’s 2.0% to 4.0% target in both 2015 and 2016. In addition, the Central Bank argued that inflation expectations remained well-anchored and that the weak international oil price had translated into lower inflationary pressures. Moreover, the Bank affirmed that the outlook for the domestic economy is positive and that it expects private demand, bank lending growth and upbeat business sentiment to sustain domestic demand. In the Bank’s view, risks to the inflation outlook are broadly balanced. While pending adjustments in utility rates and power shortages constitute upside risks, slower-than-expected global growth represents the main downside risk.

The next monetary policy meeting is scheduled for 26 March.

FocusEconomics Consensus Forecast panelists see the Reverse Repurchase rate at 4.28% in 2015. For 2016, panelists expect the Reverse Repurchase rate to rise to 4.61%.


Author: Teresa Kersting, Economist

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Philippines Monetary Policy Chart


Philippines Monetary Policy February 2015

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


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