The Monetary Board of the Bangko Sentral ng Pilipinas (BSP) opted to maintain the policy rate at 6.25 percent during its meeting on June 22.
BSP Governor Felipe M. Medalla reaffirmed the possibility of a “hold” policy stance for the next two to three meetings.
This decision marks the second consecutive pause in rate adjustments, suggesting that the current key rate will likely remain unchanged until the next policy meeting on August 17.
The BSP expects inflation to gradually return to within the target range by October or November this year.
Both Medalla and BSP Deputy Governor Francisco G. Dakila Jr. mentioned the adjustments made to inflation forecasts, lowering the 2023 projection to 5.4 percent while raising the 2024 outlook to 2.9 percent due to an anticipated more active economy and the influence of the hawkish US Federal Reserve.
Additionally, the BSP introduced the 2025 consumer price index forecast at 3.2 percent, aligning with the target range.
While recent declines in headline and core inflation support expectations of inflation below four percent by the fourth quarter, the BSP remains vigilant due to potential risks such as transport fare increases, minimum wage adjustments, supply constraints, El Niño weather conditions, and potential knock-on effects of higher toll rates on agricultural prices.
Upside risks include the impact of a weaker-than-expected global economic recovery.
The BSP’s decision to maintain the current monetary policy settings allows for further assessment of inflation and domestic demand under tighter monetary conditions while keeping a watchful eye on potential second-round effects.