MANILA, Philippines — The Bangko Sentral ng Pilipinas yet again reduced its key policy rate by 0.25 percentage point. It is now at 4.75 percent.
The BSP’s decision was contrary to expectations, even as inflation in the Philippines remained below the BSP’s target range of 2 percent to 4 percent.
The BSP said potential electricity rate adjustments and possible increases in tariffs on rice imports could add some upward pressures. Nonetheless, the risks to the inflation outlook are limited as price pressures are expected to ease.
“The Monetary Board likewise noted that the outlook for domestic economic growth has weakened,” the BSP said in a statement. “This outlook reflects in part the impact on business confidence of governance concerns about public infrastructure spending. Indications of moderating demand also reflect lingering uncertainty from the external environment.”
The increase in consumer prices registered at 1.7 percent year-on-year in September. This was the seventh straight month that inflation printed below 2 percent.
Also, inflation averaged at 1.7 percent from January to September.
BSP Governor Eli Remolona Jr. earlier said that at 5 percent, the benchmark interest rate was at the “Goldilocks” level. This means it is “just right,” neither too high nor too low.
Last week, an Inquirer Business poll of 16 analysts showed that 10 of them expected the BSP to keep the policy rate unchanged.
The central bank’s latest move follows three consecutive policy setting meetings when the key rate was lowered by a quarter of a percentage point each time. These meetings were held in April, June and August.
