BSP keeps benchmark rate unchanged at 6.5%

MANILA  -The Monetary Board remains wary of the upward pressure on prices of goods and services that may keep headline inflation in the Philippines among the highest in Asia, but they kept the key policy rate of the Bangko Sentral ng Pilipinas unchanged at 6.5 percent on Thursday.

In a press briefing, MB Chair and BSP Governor Eli Remolona Jr. cited in particular factors such as higher transport charges, increased electricity rates and higher oil prices.

BSP senior assistant governor Iluminada Sicat said there was potential buoyancy of prices in the next few months based on expectations that the El Niño climate phenomenon, which affects food production, may grow stronger.

READ: Food price hikes feared as El Niño strengthens

Even then, Sicat said the MB’s risk-adjusted inflation forecast for full-year 2023 improved slightly to 6 percent from the 6.1 percent forecast in November.

The central bank signaled policy would stay tight for longer to bring inflation back to target.

READ: PH inflation slows further, moves closer to target

Annual inflation rose at its slowest pace in 20 months in November at 4.1 percent versus the previous month’s 4.9 percent, bringing the average rate over the 11-month period to 6.2 percent, well outside the central bank’s 2 percent-4 percent target.

The central bank said inflation expectations were broadly anchored, mid-term growth prospects were firm and risks to inflation overall were still tilted to the upside. with a report from Reuters