Philippine c. bank keeps rates at 6.5%

The Philippine central bank maintained the key interest rate at 6.50 per cent for the fifth consecutive meeting, signalling a potential rate cut in August, the NEKKEI reported on Thursday.

The Bangko Sentral ng Pilipinas (BSP) revised its inflation forecast for 2024 downwards, from 4.0 per cent to 3.8 per cent. However, it slightly raised its projection for 2025 to 3.7 per cent from 3.5 per cent.

Despite the upward revision for next year, both forecasts remain within the target range of 2.0-4.0 per cent. This signifies an improved inflation outlook compared to 2023, when prices surged to 6.0 per cent.

The central bank acknowledged the impact of inflation on consumer spending, which contributed to a lower-than-expected economic growth of 5.7 per cent in the first quarter of 2024.

However, Governor Eli Remolona expressed confidence in the country’s medium-term growth trajectory, despite acknowledging a potential slowdown under current financial conditions.

The Philippine government has set a growth target of 6.0-7.0 per cent for 2024, as per the statement.