Philippine Central Bank Keeps Policy Rate Unchanged At 6.25%

(RTTNews) - The Bangko Sentral Ng Pilipinas left its key rate unchanged for the second straight meeting on Thursday as inflation continued its decelerating trend and policymakers remain vigilant against potential second-round effects due to the lingering upside risks to the inflation outlook.

The Monetary Board decided to maintain the interest rate on the overnight reverse repurchase facility at 6.25 percent, the central bank said Thursday.

The previous rate change was a 25 basis points hike in March.

Interest rates on the overnight deposit and lending facilities were kept at 5.75 percent and 6.75 percent, respectively.

Recent official data showed that the consumer price inflation eased to an 11-month low of 6.1 percent in May from 6.6 percent in April.

Based on the central bank's projections, inflation is expected to gradually return to the target band of 2 to 4 percent over the policy horizon.

There is an average inflation forecast of 5.4 percent for this year, down from 5.5 percent previously, and 2.9 percent for 2024.

However, the balance of risks to the inflation outlook continues to lean towards the upside due to the potential impact of additional transport fare increases and minimum wage adjustments, persistent supply constraints of key food items.

Due to these factors, the Monetary Board maintains current monetary policy settings in order to allow the BSP to further assess how tighter monetary conditions are impacting inflation and domestic demand.

However, lingering upside risks to the inflation outlook also warrant continued vigilance against potential second-round effects, the bank said in a statement.