BSP’s monetary board retains policy rate at 6.5%

MANILA, Philippines — The Bangko Sentral ng Pilipinas’ (BSP) Monetary Board (MB) has once again retained its target reverse repurchase rate at 6.5%.

This has been the fifth time the MB kept the interest rate since its off-cycle policy rate hike in October 2023 to mitigate supply-side inflation pressures.

In the MB’s press conference on Thursday, it said that it retained its policy rates as inflation outlook continues to lean on the upside.

It attributed the potential price pressures to higher transport charges, food prices, electricity rates and global oil prices. 

For two-consecutive months, the country’s inflation rate has ballooned due to high food and transport costs.

The inflation rate in March was 3.7%, rising to 3.8% in April.

RELATED: March inflation climbs to 3.7% due to soaring food, transport costs

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With the MB’s retention, interest rates on overnight deposit and lending facilities remained unchanged at 6.0% and 7.0%, respectively.

“Based on the latest GDP data, the expected path for domestic output growth over the medium term remains largely intact, even as recent indicators point to continued moderation under tight financial conditions,” the BSP’s separate press release read. 

In the same briefing, BSP Governor Eli Remolina said that the MB is now “less hawkish”.

He also said that the central bank might cut rates in August. 

“We are actually somewhat less hawkish than before, which means we could ease or cut rates in the third quarter or fourth quarter of this year, so the second half of this year,” Remolona said.