Jonell Rhae Manalo

The Bangko Sentral ng Pilipinas (BSP) reduced its policy interest rates by 25 basis points (BPS) for the second time this year, as inflation in the country showed further signs of easing as the central bank’s key policy rate now stands at 6%, following a similar 25-bps cut in August.

Photo Courtesy of Banko Sentral ng Pilipinas.

During a press briefing on Wednesday, October 16, BSP Governor Eli Remolona Jr. explained that the Monetary Board’s decision was based on the central bank's assessment of manageable price pressures.

Alongside the rate cut, the interest rates on the overnight deposit and lending facilities were also adjusted to 5.5% and 6.5%, respectively.

This latest rate cut follows a significant drop in inflation, with September marking the lowest inflation rate in four years at 1.9%, down from 3.9% in August where the main drivers of the decrease were lower prices in food and non-alcoholic beverages, as well as transportation.

Year-to-date, the country's average headline inflation is at 3.4%.

BSP projects the inflation for 2024 to remain within the government's target range, with a forecast of 3.1%

Remolona emphasized that further large rate cuts were unlikely unless economic conditions significantly worsen, noting that the risk of a 50-bps reduction in December was minimal.

The Monetary Board is scheduled to hold its next meeting on December 19.