cryptogaminggames|Philippine central bank keeps interest rate at 6.5 pct

MANILAcryptogaminggames, June 27 (Xinhua) -- The Philippine central bank decided Thursday to keep the bank's target reverse repurchase at 6.5 percent and the interest rates on the overnight deposit and lending facilities at 6 percent and 7 percent, respectively.

"The balance of risks to the inflation outlook has shifted to the downside for 2024 and 2025 due largely to the impact of lower import tariffs on rice under Executive Order (EO) 62," Bangko Sentral ng Pilipinas (BSP) Governor Eli Remolona told a press conference.

The EO 62 allows a 15 percent tariff on imported rice until 2028, down from the current 35 percent.

Nonetheless, he added that higher prices of food items other than rice, transport charges, and electricity rates continue to pose upside risks to inflation.

According to Remolona, inflation is moving closer to the midpoint of the 2 to 4 percent target range. The risk-adjusted inflation forecasts have eased to 3.1 percent for 2024 and 2025 from 3.8 percent and from 3.7 percent, respectively.

Based on the BSP's latest market forecaster survey, inflation expectations remain well-anchored.

Meanwhile, Remolona said prospects for domestic output growth remain in line with medium-term trends amid favorable labor market conditions and strong net exports.

"On balance, the Monetary Board deems it appropriate to hold monetary policy settings steady at this time," he said.

The Monetary Board also anticipates that price pressures will ease further in the second half of the year as EO 62 and Administrative Order 20 are implemented.

Administrative Order 20 seeks to enhance the country's agricultural importation policy regime by streamlining administrative processes and removing non-tariff barriers, thereby facilitating the sufficiency and timeliness of imports, especially during periods where domestic supply is inadequate to meet demand at affordable prices.

"If sustained, an improvement in the inflation outlook would allow more scope to consider a less restrictive monetary policy stance," Remolona said. However, he warned that uncertainty in the external environment calls for some caution against potential spillovers, including those in the financial markets.

He said the BSP will ensure that monetary policy remains aligned with its primary mandate to safeguard price stability conducive to sustainable economic growth.■