RATE CUT. Bangko Sentral ng Pilipinas (BSP) Assistant Governor of the Monetary Policy Sub-sector Zeno Abenoja, BSP Governor Eli Remolona Jr., and BSP Department of Economic Research Officer-in Charge Dennis Lapid (from left to right) during the Monetary Policy briefing held at the BSP office in Manila on Wednesday (Oct. 16, 2024). The central bank further reduced policy rates by 25 basis points. (PNA photo by Anna Leah Gonzales)
MANILA – The Monetary Board of the Bangko Sentral ng Pilipinas (BSP) cut key interest rates by another 25 basis points on Wednesday, as price pressures continued to be manageable.
Effective Thursday, the BSP's target reverse repurchase rate will be at 6.0 percent, while the overnight deposit and lending facilities will be adjusted to 5.50 percent and 6.50 percent, respectively.
"The Monetary Board's decision is based on its assessment that price pressures remain manageable," BSP Governor Eli Remolona Jr. said in a briefing at the central bank’s office in Manila.
The risk-adjusted inflation forecast for this year eased to 3.1 percent from 3.3 percent in the previous meeting.
BSP Assistant Governor of the Monetary Policy Sub-sector Zeno Abenoja said the lower inflation rates in August and September contributed to the lower forecast for the year.
"We have seen for example the last two inflation prints for August and September reflect slowdown in rice inflation and other key commodities including vegetables and some cereals so this has affected the outlook for the rest of the year," said Abenoja.
Headline inflation eased to 3.3 percent in August and further decelerated to 1.9 percent in September.
The risk-adjusted forecast for 2025, however, rose to 3.3 percent from the previous 2.9 percent.
The forecast for 2026 was also adjusted upward to 3.7 percent from 3.3 percent.
"For 2025 and 2026 we are seeing a higher, slightly higher, but still within target, inflation averages and the slight uptick is due to higher global oil prices which we have also observed the past few weeks, as well as some positive base effects in the next 12 months," said Abenoja.
Other upside risks to the inflation outlook for 2025 and 2026 included the potential adjustments in electricity rates and higher minimum wages in areas outside Metro Manila.
Downside factors, on the other hand, continued to be linked to the impact of lower import tariffs on rice.
Remolona said the within-target inflation outlook and well-anchored inflation expectations will continue to support the BSP's shift toward a less restrictive monetary policy.
"Nonetheless, the monetary authority will continue to closely monitor the emerging upside risks to inflation, including geopolitical factors," he said.
"Looking ahead, the Monetary Board will maintain a measured approach in its easing cycle to ensure price stability conducive to sustainable economic growth and employment," Remolona added.
He further said that another 25 basis points cut is "possible" during the next Monetary Board meeting in December.
Remolona, meanwhile, said the Monetary Board expects domestic economic growth to continue to be strong.
"This reflects improved prospects for household income and consumption, investments, and government spending, which are supported by the start of the monetary easing cycle in August and the announced reduction in reserve requirements in October," said Remolona. (PNA)
