The Philippine central bank has cut its target reverse repurchase rate by 25 basis points to 6 percent, a decision based on the assessment that price pressures remain manageable.
MANILA, Oct. 17 (Xinhua) -- The Philippine central bank decided Wednesday to cut the bank's target reverse repurchase rate by 25 basis points to 6 percent and adjusted the interest rates on the overnight deposit and lending facilities to 5.50 percent and 6.50 percent, respectively.
Bangko Sentral ng Pilipinas (BSP) Governor Eli Remolona said the adjusted rates will take effect on Thursday.
"The Monetary Board's decision is based on its assessment that price pressures remain manageable," Remolona told a news conference.
The risk-adjusted inflation forecast for 2024 eased to 3.1 percent from 3.3 percent in the previous meeting. However, the risk-adjusted estimates for 2025 and 2026 have increased slightly to 3.3 percent and 3.7 percent, respectively.
"Nevertheless, this outlook is safeguarded by well-anchored inflation expectations," Remolona added.
"The balance of risks to the outlook for 2025 and 2026 has shifted toward the upside, owing mainly to potential adjustments in electricity rates and higher minimum wages in areas outside Metro Manila," he added.
Meanwhile, downside factors continue to be linked to the impact of lower import tariffs on rice.
The Monetary Board, the highest policy-making body of the BSP, expects strong domestic economic growth to continue.
"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," Remolona said.
On balance, the within-target inflation outlook and well-anchored inflation expectations continue to support the BSP's shift toward less restrictive monetary policy.
"Nonetheless, the monetary authority will continue closely monitoring the emerging upside risks to inflation, including geopolitical factors," Remolona said.
He added that the Monetary Board will maintain a measured approach to ensure price stability conducive to sustainable economic growth and employment in its easing cycle. ■