Photo credit: BSP

The Monetary Board has decided to dial back the Bangko Sentral ng Pilipinas’ (BSP) target reverse repurchase rate by 25 basis points, bringing it down to 6.25%. This reduction, though seemingly modest, is a clear signal of the central bank's confidence in the current economic climate.

Along with this adjustment, the BSP has also tweaked the interest rates on its overnight deposit and lending facilities, setting them at 5.57% and 6.75%, respectively. These changes are part of a broader strategy to manage liquidity and keep the economy on a steady path.

BSP Governor Eli Remolona Jr. provided some insights into the decision, noting that despite a slight uptick in inflation in July, the overall trend is expected to move downward, aligning with the government’s 2-4% target range. Governor Remolona highlighted that the downside risks, primarily linked to lower import tariffs on rice, are being carefully monitored. On the flip side, he acknowledged that potential upside risks could emerge from higher electricity rates and external factors, which could put upward pressure on inflation.

Despite these mixed signals, the Monetary Board remains optimistic about the country’s economic resilience. They’re betting on the strength of domestic demand, which is expected to hold firm even as the global economic landscape continues to shift.