Philippines c. bank cuts interest rate by 25 bps

The Bangko Sentral ng Pilipinas (BSP) decided on Thursday to reduce its target reverse repurchase (RRP) rate by 25 basis points to 6.25 per cent. The overnight deposit and lending facility rates were also adjusted to 5.75 per cent and 6.75 per cent, respectively.

The central bank’s decision comes amid expectations of a downward trend in headline inflation, which is projected to fall within the government’s target range of 2-4 per cent.

The BSP’s risk-adjusted inflation forecasts for 2024 and 2025 are now at 3.3 per cent and 2.9 per cent, respectively, with a forecast of 3.3 per cent for 2026, according to the bank’s report.

“Headline inflation is projected to trend downward to within the government’s 2 ‑ 4 percent target range despite the uptick in July. The risk-adjusted inflation forecasts for 2024 and 2025 now stand at 3.3 percent and 2.9 percent, respectively. Meanwhile, the risk-adjusted forecast for 2026 is 3.3 percent. This outlook is supported by well-anchored inflation expectations over the policy horizon.”

Attribution: Bangko Sentral ng Pilipinas report

Subediting: Y.Yasser