According to Fitch’s latest credit update, inflation in the Philippines averaged 3.2 percent in the first 11 months of 2024, a significant improvement from the 6.0 percent average in 2023, the central bank noted in a statement released on Wednesday, Dec. 18, 2024.
This achievement is attributed to the BSP’s decisive actions, including three interest rate hikes last year totaling 100 basis points.
In particular, the central bank’s off-cycle increase of 25 basis points in October 2023 played a crucial role in reining in inflation. By November 2024, inflation eased to 2.5 percent, well within the BSP’s target range of 2-4 percent.
As inflation stabilized, the BSP shifted to supporting economic growth, implementing two 25-basis-point rate cuts in August and October 2024.
Fitch predicts that these measures, alongside improved inflation management, will drive Philippine gross domestic product growth to 5.7 percent in 2024, with further acceleration to 5.9 percent in 2025 and 6.2 percent in 2026.
The BSP is also enhancing monetary policy transmission through initiatives like the launch of Peso Interest Rate Swaps to deepen capital markets and improve bond market liquidity. Fitch’s report follows similar positive developments, such as S&P’s outlook revision to “positive” and R&I’s upgrade of the Philippines’ credit rating to A- in 2024.
These milestones underscore the BSP’s proactive approach to stabilizing inflation and supporting economic growth, the central bank said.
