The Monetary Board of the Bangko Sentral ng Pilipinas (BSP) today announced a 25-basis-point reduction in its Target Reverse Repurchase (RRP) Rate, bringing it down to 5.25 percent. Concurrently, the interest rates on the overnight deposit and lending facilities have been adjusted to 4.75 percent and 5.75 percent, respectively.
This decision was driven by a moderated outlook for inflation, with the inflation forecast for 2025 revised downward significantly from 2.4 percent to 1.6 percent. While forecasts for 2026 and 2027 saw marginal increases to 3.4 percent and 3.3 percent respectively, the Board noted that inflation expectations remain well anchored.
The Monetary Board also considered the emerging signs of a deceleration in global economic activity, primarily influenced by uncertainties surrounding US trade policy and the ongoing conflict in the Middle East. These global headwinds are anticipated to contribute to slower growth in the Philippines. However, the Board acknowledged potential inflationary pressures from a rise in oil prices, electricity rate adjustments, and higher rice tariffs.
“On balance, the Monetary Board sees the need for a more accommodative monetary policy stance,” said BSP. “Emerging risks to inflation from rising geopolitical tensions and external policy uncertainty will require closer monitoring.”
The BSP will continue to assess the impact of its previous monetary policy adjustments. Moving forward, the central bank reaffits its commitment to safeguarding price stability by ensuring that monetary policy settings are conducive to sustainable economic growth and employment for the Philippines.
