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BSP keeps benchmark interest rate at 6.25 percent as inflation slows

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ABS-CBN News

<div class="embed-wrap"><figure data-feedback="fb:likes,fb:comments"><img alt="Banko Sentral ng Pilipinas (BSP) Governor Felipe Medalla during the Management Association of the Philippines Economic Briefing and Membership Meeting at the Bonifacio Hall of Shangri-La at The Fort, Taguig City on August 19, 2022. Jonathan Cellona, ABS-CBN News/File" src="https://sa.kapamilya.com/absnews/abscbnnews/media/2023/business/05/18/20220819-map-membership-meeting-jc-4.jpg"/><figcaption>Banko Sentral ng Pilipinas (BSP) Governor Felipe Medalla during the Management Association of the Philippines Economic Briefing and Membership Meeting at the Bonifacio Hall of Shangri-La at The Fort, Taguig City on August 19, 2022. <em>Jonathan Cellona, ABS-CBN News/File</em></figcaption></figure></div><p>MANILA — The Bangko Sentral ng Pilipinas on Thursday kept the benchmark interest rate at its current level of 6.25 percent after inflation eased for 3 straight months. </p><p>BSP Governor Felipe Medalla made the announcement during the central bank&#x27;s Monetary Policy meeting. </p><p>After hitting a 14-year high of 8.7 percent in January, inflation decelerated for 3 straight months, settling at 6.6 percent in April, from 7.6 percent in March and 8.6 percent in February. However, the inflation rate remains above the government&#x27;s 2 to 4 percent target range.</p><p>&quot;The monetary board deems it necessary to keep the policy at its current level over the near term,&quot; Medalla said.</p><p>The BSP also lowered its inflation forecast to 5.5 percent from 6 percent for 2023 and 2.8 percent from 3.1 percent in 2024.</p><p>Medalla said inflation is expected to decline to within 2 to 4 percent on a monthly basis as early as September this year.</p><p>The BSP, however, noted several risks to inflation such as the potential impact of El Niño on food prices and utility rates, adjustments in transportation fares and wages.</p><p>When asked if another rate hike is possible this year, Medalla said it would depend on inflation as well as the adjustments of the US Federal Reserve.</p><div><strong>BANK RESERVE CUT EYED</strong></div><p>But Medalla said the monetary board also remained committed to its earlier pronouncement of reducing the country&#x27;s reserve requirement ratio (RRR) for banks. </p><p>&quot;After the latest pause in local policy rates, the markets are now anticipating a possible cut in banks’ reserve requirement ratio (RRR), as early as June 2023, as signaled recently, as one of the options to ease monetary policy other than a local policy rate cut especially if there is no Fed rate cut yet by then,&quot; RCBC Chief Economist Michael Ricafort said.</p><p>&quot;Any cut in large banks&#x27; reserve requirement ratio (RRR), from the current 12 percent could be possible, especially if inflation stabilizes further in the coming months,&quot; he added.</p><p>Ricafort said every 1 percentage point cut in the RRR is equivalent to P130 billion infused in the financial system that could increase funds for lending.</p><p>The current RRR at 12 percent has been described as among the highest in the region.</p><ul class="op-related-articles">	<li><a href="https://news.abs-cbn.com/business/05/05/23/inflation-eases-further-to-66-percent-in-april">Inflation eases further to 6.6 percent in April</a></li>	<li><a href="https://news.abs-cbn.com/business/03/23/23/bangko-sentral-hikes-benchmark-by-25-bps-to-625-percent">Bangko Sentral hikes benchmark by 25 bps to 6.25 percent</a></li></ul><figure class="op-interactive"><iframe allow="autoplay; fullscreen" frameBorder="0" height="100%" id="ivsplayer01" scrolling="no" src="https://player.ivideosmart.com/ivsplayer/v4/dist/html/iframe-src.html?iframeid=ivsplayer01&amp;key=e8c22c015ca9eafa76f1e3edfa03c603&amp;spid=3001339&amp;vid=2620432" width="100%"></iframe></figure><div class="iwantbar">Watch more News on <a href="https://www.iwanttfc.com/#!/browse/Genres/News/tag_id_genres/id_news" target="_blank">iWantTFC</a></div>

The Bangko Sentral ng Pilipinas on Thursday kept the benchmark interest rate at its current level of 6.25 percent after inflation eased for 3 straight months. 