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The facade of the Bangko Sentral ng Pilipinas on February 15, 2024. Jonathan Cellona, ABS-CBN News

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Bangko Sentral

Arthur Fuentes

Benise Balaoing

ABS-CBN News

<p>MANILA (UPDATE) -- The Bangko Sentral ng Pilipinas (BSP) kept its benchmark target reverse repurchase rate (RRP) steady in its April policy meeting.</p><p>BSP Governor Eli Remolona said the RRP, which banks use to price loans, is still at 6.5 percent.</p><p>Remolona said the Monetary Board made the decision as &quot;the latest inflation path shifted slightly higher.&quot; He said the risk-adjusted inflation forecast for 2024 has risen to 4 percent from 3.9 percent in the previous Monetary Board meeting. </p><p>Inflation picked up for the second straight month in March to 3.7 percent from 3.4 percent in February and 2.8 percent in January. However, the figures were still within the 2 to 4 percent target range of economic managers.</p><div><a href="https://news.abs-cbn.com/business/2024/4/4/inflation-quickens-to-3-7-percent-in-march-2006" rel="noopener noreferrer" target="_blank">Inflation quickens to 3.7 percent in March</a></div><p>“The risks to the inflation outlook continue to lean toward the upside,” Remolona said.</p><p>The Inflation rate may continue to be high due to higher transport charges, elevated food prices, higher electricity rates, and global oil prices. Wage hikes may also push prices up.</p><div><br/></div><div><strong>RATE HIKE OR CUT?<br/></strong></div><p>The BSP chief meanwhile said it was unlikely for the central bank to again hike rates despite rising inflation as monetary policy was already “tight at the moment.”</p><p>“And this tightness, we think, is sufficient to bring inflation rates down,” Remolona said.</p><p>He added that “growth would have to be really, really weak” and inflation “really, really strong” for the BSP to consider another rate hike. The last time the BSP hiked rates was in October last year when it made an off-cycle monetary policy adjustment.</p><p>A rate cut on the other hand may come within the year or early next year if the BSP sees “good news.”</p><p>“If we see some good news, with inflation and somewhat weak growth, we could ease by the third quarter. And then if it&#x27;s the opposite, we would ease by the first quarter of 2025,” Remolona said.</p><p>Economic growth would have to be surprisingly weak for the BSP to cut rates before the third quarter.</p><p>“So we think growth will be about 5.9 [percent] thereabouts in 2024. We would have to be somewhat surprised by a weak growth number for us to cut that sooner than in Q3,” he said.</p><p>The BSP is also still looking to cut banks’ required reserve ratio, but has yet to determine the right time and amount for an RRR cut.</p><div><br/></div><div><strong>RICE AT THE CENTER</strong></div><p>Remolona meanwhile said that the single biggest factor for the BSP’s change in its inflation risk assessment was the price of rice.</p><p>“If I were to name one single commodity, it would be rice. And the rice prices, they&#x27;re not only very significant this time, they also are what we call salient prices. They get noticed, and they tend to affect expectations far more than other commodities.”</p><div><a href="https://news.abs-cbn.com/business/2024/4/4/agri-chief-sees-no-rice-price-cut-until-june-or-july-1426" target="_blank" rel="noopener noreferrer"></a><span style="color:rgb(29, 29, 29);letter-spacing:normal;orphans:2;text-align:start;text-indent:0px;text-transform:none;widows:2;word-spacing:0px;-webkit-text-stroke-width:0px;white-space:normal;text-decoration-thickness:initial;text-decoration-style:initial;text-decoration-color:initial;display:inline !important;float:none"><a href="https://news.abs-cbn.com/business/2024/4/4/agri-chief-sees-no-rice-price-cut-until-june-or-july-1426" rel="noopener noreferrer" target="_blank">Agri chief sees no price cut on rice until June or July</a></span></div><div><a href="https://news.abs-cbn.com/business/2024/4/6/da-rules-out-rice-price-cap-amid-inflation-1918" rel="noopener noreferrer" target="_blank">DA rules out rice price cap amid inflation</a></div><div><em></em><span class="fr-video fr-deletable fr-fvc fr-dvb fr-draggable" contenteditable="false" draggable="true"><iframe width="640" height="360" src="https://www.youtube.com/embed/InO1d8G32Mg?&amp;wmode=opaque&amp;rel=0" frameBorder="0" allowfullscreen="" class="fr-draggable"></iframe></span><br/></div>

<p>The Bangko Sentral has kept rates steady as inflation rises in February and March. </p>

The Bangko Sentral has kept rates steady as inflation rises in February and March.

BSP keeps rates steady amid inflation uptick

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BSP keeps rates steady amid inflation uptick

Arthur Fuentes,

Benise Balaoing,

ABS-CBN News

Published Apr 08, 2024 03:10 PM PHT

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Updated Apr 08, 2024 04:15 PM PHT

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inflation

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Eli Remolona

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