The Bangko Sentral ng Pilipinas (BSP) Monetary Board has decided to maintain the overnight reverse repurchase (RRP) rate at 6.25% following its latest policy meeting, citing persistent inflation concerns despite signs of economic stabilization.
Inflation Outlook
BSP Governor Eli Remolona Jr. noted that while headline inflation has moderated to 4.1%, core inflation remains elevated. The central bank's inflation forecast for 2025 stands at 3.5%, within the target range of 2-4%.
"We remain vigilant. The risks to inflation are tilted to the upside, particularly from potential supply disruptions and global oil price volatility," Governor Remolona explained during the post-meeting press conference.
Economic Growth Considerations
The Monetary Board acknowledged the economy's resilience, with GDP growth projected at 6.0-7.0% for 2025. However, policymakers emphasized that price stability remains the primary mandate.
Market Reactions
The Philippine Stock Exchange Index showed modest gains following the announcement, while the peso strengthened slightly against the US dollar. Analysts had widely anticipated the hold decision.
Future Guidance
The BSP signaled that rate cuts remain possible in the second half of 2025 if inflation continues its downward trajectory. However, the central bank retained flexibility to adjust policy in either direction based on data.
Business Sector Response
Business groups expressed understanding of the BSP's cautious stance while hoping for eventual rate reductions to support investment and consumption. The Philippine Chamber of Commerce called for continued coordination between monetary and fiscal authorities.