BSP cuts policy rates by 25 basis points to 4.5%

May 9, 2019

The Bangko Sentral ng Pilipinas ( BSP) reduced interest rate on its overnight reverse repurchase facility by 25 basis points to 4.5 percent effective Friday.

The interest rates on the overnight lending and deposit facilities 
were reduced accordingly. 

BSP Governor Benjamin Diokno made the announcement in a televised conference after the Monetary Board met.

Diokno's announcement came after the Philippine Statistics Authority announced earlier Thursday that first quarter gross domestic product grew by 5.6 percent, the slowest since 5.1 percent in the first quarter of 2015.

''The Monetary Board's decision is based on its assessment that the inflation outlook continues to be manageable, with easing price pressures owing to the decline in food prices amid improved supply conditions,'' the BSP said.

Latest baseline forecasts indicate inflation remains likely to settle within the 
target range of 3.0 percent ± 1.0 percentage point for both 2019 and 2020, while inflation  expectations have moderated further, the BSP added. 

''In deciding on the stance of monetary policy, the Monetary Board noted the impact of the budget delays on near-term economic activity, but took the view that the prospects for domestic  demand remain firm , to be supported by a projected recovery in household spending and the  continued implementation of the government's infrastructure program,'' it said.

The Monetary Board also observed that the global economic growth momentum has slowed down in 2019, the BSP said.

Indications of slower growth in domestic liquidity and credit require careful monitoring, it added. 

The Monetary Board said risks to the inflation outlook remain broadly balanced for 2019 amid risks of a prolonged El Nino episode and higher-than- expected increases in global oil prices. DMS