During its second policy review of the year, the central bank’s Monetary Board maintained its target reverse repurchase rate at 6.50 percent, still at its highest level in nearly 17 years or since the 7.50 percent in May 2007, as widely expected.
The BSP raised its risk-adjusted inflation forecasts to four percent from 3.9 percent for 2024 but kept its 3.5 percent projection for 2025. Risks continue to cloud the outlook, as possible further price pressures are linked mainly to higher transport charges, elevated food prices, higher electricity rates, and global oil prices.“The Monetary Board noted that while upside risks to inflation have raised inflation expectations, these expectations have remained broadly anchored,” Remolona said.
The Monetary Board has raised key policy rates by 450 basis points from May 2022 to October 2023 to tame inflation and stabilize the peso. “But we reckon that this will be the peak, with food inflation likely to turn a corner, as base effects will turn progressively favorable until the end of the third quarter, starting in May,” he added.
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