THE Bangko Sentral ng Pilipinas (BSP) kept the country’s benchmark target reverse repurchase rate (RRP) steady in the Monetary Board’s first meeting of the year.
BSP Senior Assistant Governor Iluminada Sicat said the RRP, which banks use to price loans, is still at 6.5 percent.
The central bank adjusted its inflation forecast for the year to 3.9 percent, down from the 4.2 percent announced in December last year.
Sicat said that the average inflation forecast of independent forecasters is also 3.9 percent, which shows that inflation expectations appear to be more firmly anchored.
“For 2025, the risk-adjusted inflation forecast is relatively steady at 3.5 percent from 3.4 percent,” the BSP said.
Despite this, there were still many factors that could speed up inflation this year, the BSP said.
“The upside risks to the inflation forecasts are linked mainly to higher transport charges, increased electricity rates, higher oil and domestic food prices, and the additional impact on food prices of a strong El Niño episode,” the central bank said.
Inflation may also see an uptick from March onwards due to the lower base of the inflation rate last year.
Economists earlier noted that January 2024’s slower inflation rate of 2.8 percent was partly due to the high base of 8.7 percent in January 2023.
Meanwhile, the BSP said it expects GDP growth moderate this year, as the economy absorbs the impact of earlier rate hikes.
Economic managers in the Development Budget Coordination Committee are aiming for a growth rate of 6.5 to 7.5 percent this year.
The economy grew an average of 5.6 percent in 2023, missing the government’s target of at least 6 percent growth. (ABS-CBN News)
