QUICK LOOK: BSP cuts rates by 25 bps for 3rd time this year amid muted inflation
December 19, 2024
5:46PM PHT
Updated: December 20, 2024
4:32PM PHT
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The Bangko Sentral ng Pilipinas (BSP) on Thursday cut its target reverse repurchase rate — the rate which influences how much the rest of the local economy pays for loans — by 25 basis points to 5.75 percent, with corresponding adjustments to deposit (5.25 percent) and lending (6.25 percent) rates.
Inflation outlook: Inflation is expected to stay within the target range, with projections for 2025 slightly revised to 3.4 percent from 3.3 percent, and 2026 holding steady at 3.7 percent, BSP Governor Eli Remolona Jr. said in a briefing.
Risk assessment: According to the central bank’s policy making Monetary Board, upside risks to inflation stem from potential fare and electricity rate hikes, while lower rice import tariffs serve as the main downside risk.
Domestic demand: Meanwhile, demand remains firm but subdued, supported by easing inflation and a stronger labor market, although external risks could dampen economic activity.
Future strategy: The BSP will maintain a measured approach to monetary easing to balance price stability and sustainable economic growth, with ongoing monitoring of geopolitical risks, the central bank chief said.
