Philippines Holds Steady on Interest Rates Amid Inflation Moderation

The Philippine central bank decided to sustain its interest rates as part of its strategic response to a moderated inflation outlook. During a recent press conference, Bangko Sentral ng Pilipinas (BSP) Deputy Governor Francisco Dakila pointed out a favourable adjustment in the inflation forecast across the foreseeable economic landscape.

With an emphasis on precision and reliability, the BSP revised its anticipated inflation rates for 2024 and 2025, lowering them to 4.4 percent and 3.4 percent, respectively, from previous projections. Dakila attributed this revision to easing inflationary pressures, citing government interventions and seasonal patterns as contributing factors.

Acknowledging lingering concerns despite improvements in the food supply, Dakila identified potential risk factors. These include escalations in transport costs, electricity rates, international oil prices, and unforeseen adjustments in minimum wages beyond Metro Manila.

However, he also highlighted the potential for mitigating factors, such as a weaker-than-expected global recovery and governmental measures to counter the impacts of El Nino weather conditions to alleviate inflationary pressures.

In light of these considerations, Dakila emphasized the BSP’s decision to maintain the current policy rate. This approach allows for previous adjustments, including the recent rate increase in October, to progressively influence and stabilize the economy in line with prudent fiscal management.

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