The Bangko Sentral ng Pilipinas reduced its overnight reverse repurchase rate by 25 basis points to 6.25% on 15 August 2024, the first cut to the Philippines' benchmark policy rate since November 2020, as the central bank projected inflation to settle within its 2% to 4% target band, despite July inflation of 4.4%.
Governor Eli Remolona said inflation was on a target-consistent path and expected to trend back within the target range, providing the basis for the adjustment.
BACKGROUND
The BSP's last rate cut before this decision was delivered in November 2020, during the pandemic. The BSP subsequently raised rates as inflation rose.
The return to rate cuts comes as the BSP projects Philippine inflation to settle within the 2% to 4% target corridor, with inflation forecasts of 3.3% for 2024 and 2.9% for 2025.
OUTLOOK
The bank has indicated that its approach remains data-dependent and that the pace of subsequent adjustments, if any, will be calibrated to incoming information on prices, growth and developments in the external environment.