The Monetary Board of the Bangko Sentral ng Pilipinas on Monday kept the overnight borrowing rate steady at 6.5 percent for the fourth consecutive policy meeting since October 2023.
Inflation rate averaged 3.3 percent in the first quarter within the government’s target range of 2 percent to 4 percent for the year.“The risks to the inflation outlook continue to lean toward the upside. Possible further price pressures are linked mainly to higher transport charges, elevated food prices, higher electricity rates, and global oil prices. Potential minimum wage adjustments could also give rise to second-round effects,” the BSP said.
“Given upside domestic inflation risks as well as chances that the US Fed might delay its easing cycle, the risk for BSP is tilted to a later start of the rate cuts,” it said. “As such, we think BSP is unlikely to move before the Fed, as a narrower interest rate differential will weigh on the peso. Our US team recently pushed back the timing of the first rate cut by the Fed to June from May, and the risks are tilted towards an even later start of the easing cycle,” it said.