Metro Manila (CNN Philippines, September 21) — The Bangko Sentral ng Pilipinas’ (BSP) Monetary Board has kept interest rates steady for the fourth straight meeting despite last month’s hotter inflation report.
In a briefing Thursday, officials said the policy rate would remain at 6.25%.Interest rates on the overnight deposit and lending facilities were also retained at 5.75 percent and 6.75 percent, respectively.BSP Governor Eli Remolona said they see “a slightly higher inflation path,” but numbers may fall within the target range of 2% to 4% “by November.”“At the same time, the Monetary Board noted that recent indicators of domestic economic activity pointed to waning pent-up demand, even as the impact of prior monetary policy tightening continues to weigh on credit,” the official said.“Given these considerations, the Monetary Board deemed it appropriate to maintain its pause amid the emerging upside risks to the inflation outlook,” Remolona said.Monetary officials also made upward adjustments for their 2023 and 2024 forecasts amid risks brought by “spillovers” from weather disturbances, surging fuel prices in the global market, and the recent weakening of the peso.Projections are now the following:2023 – 5.8% from 5.6%2024 – 3.5% from 3.3%For 2025, the central bank still sees the average inflation to reach 3.4%.Given developments threatening inflation, which also include elevated electricity rates and petitions for transportation fare hikes, the BSP executive said imposing higher rates “is on the table for November.”“How big it will be will depend on the data, how bad the data is with respect to inflation,” he added.“We’re ready to raise if supply shocks are significant enough,” Remolona said.Due to faster inflation, central banks around the world lean towards increasing interest rates to prompt businesses and consumers to shell out less money for goods and services.
