As part of the adjustment, the overnight deposit and lending facility rates were revised to 5.5 percent and 6.5 percent, respectively. These changes will take effect on Oct. 17, 2024.
The central bank chief said the Monetary Board’s decision reflects its assessment that inflation pressures remain under control.
The BSP’s policy rate was also reduced by 25 basis points during the Monetary Board’s previous meeting last August.
“The balance of risks to the outlook for 2025 and 2026 has shifted toward the upside owing mainly to potential adjustments in electricity rates and higher minimum wages in areas outside Metro Manila,” Remolona said. “Meanwhile, downside factors continue to be linked to the impact of lower import tariffs on rice.”
The BSP lowered its inflation forecast for 2024 to 3.1 percent from the previous estimate of 3.3 percent. However, inflation forecasts for 2025 and 2026 increased slightly to 3.3 percent and 3.7 percent, respectively.
Despite these risks, the Monetary Board emphasized that inflation expectations remain well-anchored.
It also cited the positive impact of policy adjustments on the domestic economy, including improved household income, consumption, investments, and government spending.
The easing measures, starting with the August rate cut and the October reduction in reserve requirements, support sustainable economic growth, the central bank said.
While the BSP acknowledged some risks, such as higher geopolitical tensions and energy costs, it noted that downside factors like reduced rice import tariffs could temper inflation.
Looking ahead, the BSP will take a “measured approach” in its policy easing cycle to maintain price stability while fostering economic growth and employment, the central bank chief said.
