Philippine central bank keeps key interest rate on hold at 4.75 pct, downwardly revises inflation projection

The Philippine central bank decided to keep its key interest rate on hold today after having hiked to 4.75 percent. The BSP kept the overnight RRP at 4.75 percent. Accordingly, the overall interest rate corridor was also kept on hold.

The central bank lowered its inflation forecast through 2020. The BSP revised its inflation forecast to 5.2 percent for this year, 3.18 percent for next year and 3.04 percent for 2020.

The central bank is also of the view that risks to the next year forecast are now balanced. It also projects headline inflation to fall below 4 percent by the first quarter of 2019, earlier than the first half of timeline set in the November meeting.

The headline inflation appears to have peaked at 6.7 percent year-on-year in September and has been sequentially easing since. Lower food prices, an outcome of easing supply side prices have aided. The likely passage of the rice importation bill and lower prices are expected to further add to the downward momentum, noted ANZ in a research report.

“We are confident that the tightening cycle in the Philippines has now concluded and no further hikes are likely in 2020”, added ANZ.