BSP’s MB slashes interest rates anew, bringing it down to 5.75%

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Transcript

00:00The Banco Centralang Pilipinas has lowered its key interest rate by 25 basis points,

00:05the 5.75% in a move aimed at balancing inflation concerns while fostering economic growth.

00:13Our Noel Talacay dwells on this in this report.

00:18In a landmark decision today, the Monetary Board of the Banco Centralang Pilipinas announced

00:24a 25 basis point reducing in the Target Reverse Reportage or RRP rate, widely known as interest

00:32rate, bringing it down to 5.75%.

00:36Adjustment to the overnight deposit and lending facilities followed suit, setting at 5.25%

00:43and 6.25% respectively.

00:47The reason we're cutting in baby steps is because we're not absolutely sure about inflation.

00:55We still worry that inflation might start to rise again and by cutting in baby steps,

01:03at this point we're still somewhat tight, somewhat tight, so that's kind of insurance

01:09against a possible increase in inflation.

01:12However, the risk-adjusted inflation forecast for 2025 edged slightly higher to 3.4% from

01:20the previous 3.3% while the forecast for 2026 remains unchanged at 3.7%.

01:28The board warned the balance of risk to the inflation outlook still leans to the upside,

01:33driven by potential increases in transport fares and electricity rates.

01:39On the other hand, lower import tariffs on rice could exert downside pressure on prices.

01:45Domestic demand is expected to remain steady but subdued, supported by easing inflation

01:51and improvements in the labor market.

01:53However, BSS, global headwinds, and external risks could dampen economic activity and market

02:00sentiment.

02:01On balance, the within-target inflation outlook and well-anchored inflation expectations continue

02:09to support the BSP's shift toward less restrictive monetary policy.

02:17Nonetheless, the monetary authority will continue to closely monitor the emerging upside risks

02:26to inflation, notably geopolitical factors.

02:30This move is expected to benefit households, businesses, and the broader economy particularly

02:36as inflation continues to moderate and the job market shows signs of improving.

02:42Looking ahead, the Monetary Board of the Banko Sentral ng Pilipinas vowed to take a measured

02:48approach to further easing to ensure that price stability is maintained while promoting

02:54sustainable economic development, growth, and employment.

02:58Noel Talaca from the National TV Network, for New and Better Philippines.

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