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Monetary Policy Report
December 2024
Monetary Policy Summary Economic Outlook Current Developments Summary of MP Decisions Download Full Report
Articles
Information Content of Monetary Aggregates in the Philippines
BSP Survey of External Forecasters
Monetary Policy Summary
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The BSP decided to reduce its target reverse repurchase rate by 25 basis points to 5.75 percent at its monetary policy meeting on 19 December 2024. Likewise, the BSP reduced the interest rates on the overnight deposit and lending facilities to 5.25 percent and 6.25 percent, respectively. Read more

Economic Outlook
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Inflation will likely settle within the 2.0–4.0 percent target range for 2025 to 2026. The disinflation process will be driven by the reduced rice tariff, declining global oil prices, and negative base effects through the first half of 2025. Inflation will likely settle at the midpoint of the target until the first half of 2025. From the second half of 2025 to the first half of 2026, inflation is projected to accelerate toward the upper end of the target, reflecting the lagged impact of higher minimum wages and positive base effects. By the second half of 2026, inflation could ease closer to the midpoint, supported by a continued decline in global commodity prices. Read more
Current Developments
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Headline inflation rose in November 2024 but remained within the target range. The increase was mainly due to higher food prices, particularly for vegetables and fish, which were affected by weather disturbances. However, slower rice inflation helped temper the overall increase in food prices. Read more
Summary of MP Decisions
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Information Content of Monetary Aggregates in the Philippines
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Monetary aggregates have played a less prominent role in monetary policy analysis since the adoption of inflation targeting (IT) by many central banks in the 1990s. Former Bank of Canada Governor Gerald K. Bouey famously remarked, “We didn't abandon monetary aggregates, they abandoned us.” Several studies, such as those by Estrella and Mishkin (1996) for the United States, Tallman and Chandra (1996) for Australia, Astley and Haldane (1997) for the United Kingdom, and Gertler and Hoffman for 46 advanced economies, provided empirical evidence that monetary aggregates do not significantly explain future output and inflation. Read more
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