At its monetary policy meeting Thursday, the Monetary Board decided to reduce the Bangko Sentral ng Pilipinas (BSP) Target Reverse Repurchase (RRP) Rate by 25 basis points to 5.75 percent.

The interest rates on the overnight deposit and lending facilities were accordingly adjusted to 5.25 percent and 6.25 percent, respectively.

Inflation is projected to stay within the target range over the policy horizon. The risk-adjusted inflation forecast for 2025 has risen slightly to 3.4 percent from 3.3 percent in the previous meeting. For 2026, the risk-adjusted forecast is unchanged at 3.7 percent. Inflation expectations remain well-anchored.

The balance of risks to the inflation outlook continues to lean to the upside due largely to potential upward adjustments in transport fares and electricity rates.

The impact of lower import tariffs on rice remains the main downside risk to inflation.

The Monetary Board noted that domestic demand is likely to remain firm but subdued. Private domestic spending is expected to be supported by easing inflation and improving labor market conditions.

However, downside risks in the external environment could materialize and temper economic activity and market sentiment.

On balance, the within-target inflation outlook and well-anchored inflation expectations continue to support the BSP’s shift toward less restrictive monetary policy.

Nonetheless, the monetary authority will continue to closely monitor the emerging upside risks to inflation, notably geopolitical factors. Bangko Sentral ng Pilipinas