BSP’s Monetary Board keeps interest rates at 6.50%

The Bangko Sentral ng Pilipinas’ (BSP) Monetary Board (MB) has kept the interest rates unchanged at 6.50 percent. The interest rates for overnight deposits and lending will also stay at six percent and seven percent, respectively.

According to BSP, inflation is expected to decrease in 2024 and 2025 due to lower rice import tariffs under Executive Order 62. However, rising prices of other food items, transportation and electricity still pose risks.

“Given these factors, the Monetary Board decided to maintain current monetary policy settings. The board also expects inflation pressures to lessen in the second half of the year with the implementation of EO 62 and Administrative Order 20. If this trend continues, there may be more room to consider easing monetary policy. However, external uncertainties require caution against potential impacts, especially in financial markets,” the MB said on Thursday, June 27, 2024.

Inflation is approaching the BSP’s two to four percent target range, with forecasts dropping to 3.1 percent for both 2024 and 2025. Market forecasters’ expectations for inflation remain stable.

Domestic economic growth remains strong, supported by favorable labor market conditions and robust net exports, the BSP said.

June inflation outlook

Meanwhile, on Friday, June 28, the BSP projects June 2024 inflation to settle within the range of 3.4 to 4.2 percent.

The central bank said increases in the prices of agricultural commodities like rice, vegetables, meat, and fish, along with the peso depreciation and higher domestic oil prices, are the primary sources of upward price pressures for the month. Meanwhile, lower electricity rates and fruit prices could contribute to the deceleration in inflation. / KOC

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