Bangko Sentral ng Pilipinas Governor Benjamin Diokno. (File photo courtesy of PTV)
MANILA – Philippine monetary officials on Thursday slashed by an additional 25 basis points the Bangko Sentral ng Pilipinas’ (BSP) key policy rates, a follow up to its move last May, as inflation slows and growth remains firm.
Effective August 9, 2019, the central bank’s overnight reverse repurchase (RRP) rate is 4.25 percent, the overnight repurchase (RP) rate is 4.75 percent and the overnight deposit rate is 3.75 percent.
In a briefing, BSP Governor Benjamin Diokno said members of the policy-making Monetary Board (MB) have noted that price pressures continue to ease, with average inflation until 2021 seen to remain within target.
He said risks to the country's inflation outlook mostly balanced for this and next year while it is tilted downward in 2021, with weaker global growth prospects seen to temper inflation outlook.
“The potential adverse effects of a prolonged El Nino episode to inflation have subsided,” he said.
The central bank chief also noted that domestic growth is seen to recover in the second half of the year after a weak first half due to the impact of the delay of the approval of national budget.
He said outlook for domestic growth “continues to be firm on the back of a projected recovery in household spending and the accelerated implementation of the government’s infrastructure program.”
He said the MB “believes that the benign inflation outlook provides room for a further reduction in the policy rate as a pre-emptive move against the risks associated with weakening global growth.”
“Going forward, the BSP will continue to monitor price and output conditions to ensure that monetary policy remains appropriately supportive of sustained non-inflationary economic growth over the medium term,” he added.
Earlier, Diokno indicated a possible cumulative 50 basis points cut in the central bank’s key rates until end-2019 as inflation is seen to remain within target and growth firm despite the slip in the first half of the year.
Economists are also projecting rate cuts starting this month after inflation reversed from its downward trend last June and growth remains stable amid the slowdown in the first half of the year.
After peaking at 6.7 percent in September and October last year, domestic inflation rate decelerated until a one-month uptick last May to 3.2 percent from the previous month’s three percent.
Last June it posted a slower growth of 2.7 percent and further went down to 2.4 percent last July. (PNA)
