Philippine Central Bank Unexpectedly Retains Policy Rates
2025-02-09
3040
(fxcue news) - The Philippine central bank unexpectedly left its interest rates unchanged after cutting it for three straight times amid heightened uncertainty over US trade policy.
The Monetary Board of the Bangko Sentral ng Pilipinas decided to hold the target reverse repurchase rate at 5.75 percent. The bank was widely expected to cut the rate by 25 basis points.
The interest rates on the overnight deposit and lending facilities were kept unchanged at 5.25 percent and 6.25 percent, respectively.
Inflation forecast for 2025 was lifted to 3.5 percent from 3.4 percent, while the projection for 2026 was retained at 3.7 percent.
The board said uncertainty about the outlook for inflation and growth warrant keeping monetary policy settings steady.
Policymakers await further developments on US trade policies before deciding on the timing and magnitude of further reductions in the policy rate.
Looking ahead, the BSP said it anticipates continuing its measured shift to less restrictive monetary policy settings, even as previous policy adjustments further work their way through the economy.
Today's decision represents a pause, rather than a halt to the easing cycle, Capital Economics' economist Gareth Leather said.
As the economy continued to grow strongly in the fourth quarter of 2024, there is little need for aggressive rate cuts, he noted. The economist expects a total of 100 basis points of cuts in 2025.
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