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Monetary Policy Report
May 2024
Monetary Policy Summary Economic Outlook Current Developments Summary of MP Decisions Download Full Report
Articles
An Evaluation of the BSP’s 2023 Forecasting Performance Degree of Inflation Expectations Anchoring in the Philippines
Monetary Policy Summary
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At its monetary policy meeting on 16 May 2024, the BSP decided to hold the target overnight reverse repurchase (RRP) rate steady at 6.50 percent. The interest rates on the overnight deposit and lending facilities were likewise maintained at 6.0 percent and 7.0 percent, respectively. Read more

Economic Outlook
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The latest baseline forecasts are slightly lower for 2024 and slightly higher for 2025 relative to the projections cited in the February 2024 Monetary Policy Report. The forecast for 2024 has declined on account of lower projected inflation for Q2 2024. The forecast for 2025 has increased on account of the recent uptick in global crude oil prices and the depreciation of the peso. Read more
Current Developments
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Headline inflation increases slightly in April 2024. Inflation rose slightly due mainly to the higher year-on-year (y-o-y) increase in the prices of food and nonalcoholic beverages. Food inflation climbed further due to the increase in the prices of vegetables and fish from negative inflation readings in March. Meanwhile, nonfood inflation was broadly steady as higher gasoline and diesel prices, which reflect rising international crude oil prices in April, were offset by lower inflation for heavily weighted subcomponents, namely, housing, water, electricity, gas, and other fuels, as well as restaurants and accommodation services. Read more
Summary of MP Decisions
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An Evaluation of the BSP’s 2023 Forecasting Performance
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The BSP regularly evaluates its inflation forecasting performance as part of its continuing efforts to enhance macroeconomic forecasting models and promote transparency in monetary policy formulation.2 This article offers a summary of the latest assessment of the BSP's forecasting performance for 2023, specifically examining the (a) month-ahead inflation forecasts; (b) annual inflation forecasts; and (c) standard statistics for forecast accuracy, unbiasedness, efficiency, and benchmarking. Compared with the 2022 results, forecast errors in 2023 for both month- and year-ahead forecasts were larger due to significant volatility in commodity prices from continued supply disruptions in key food items and higher oil prices. Read more
Degree of Inflation Expectations Anchoring in the Philippines
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The BSP’s primary mandate is to promote price stability conducive to a balanced and sustainable economic growth. Price stability is achieved when the average annual inflation is within the 2 to 4 percent inflation target range. The inflation expectations channel is a very important transmission channel of monetary policy as it influences the wage- and price-setting behaviors of firms as well as the savings and investment decisions of households. Thus, well-anchored inflation expectations are key to achieving price stability. Read more
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