Download Monetary Policy Summary

At its monetary policy meeting on 14 February 2024, the BSP decided to keep the target overnight reverse repurchase (RRP) rate unchanged at 6.50 percent. Thus, the interest rates on the overnight deposit and lending facilities were likewise maintained at 6 percent and 7 percent, respectively. Read more

Download Economic Outlook

The latest baseline forecasts show a slightly lower path compared to the previous Monetary Policy Report (MPR). Inflation is projected to average at 3.6 percent for 2024, slightly lower by 0.1 percentage point (ppt). The downward revision is driven by lower-than-expected inflation outturns, peso appreciation, and lower global crude oil prices, partly offset by higher assumptions for global non-oil prices, stronger domestic growth outlook, impact of El Niño weather conditions, and minimum wage adjustments in areas outside NCR (AONCR). Meanwhile, the inflation forecast for 2025 is broadly unchanged at 3.2 percent. Read more

Download Current Developments

Headline inflation eases further in January 2024. Inflation eased further to 2.8 percent in January 2024 from 3.9 percent in December 2023. The January inflation rate was the lowest since October 2020 when inflation was at 2.3 percent. The bulk of the decline can be traced primarily to lower y-o-y food inflation as prices of vegetables, tubers, plantains, cooking bananas and pulses, and meat and other parts of slaughtered land animals declined. Inflation for fish and other seafood also slowed. Similarly, non-food inflation eased owing to slower price increases of housing, water, electricity, gas and other fuels. Read more

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The Philippines experienced successive supply shocks from 2021 to 2023 which exerted significant upward pressures on inflation. Given the large swings in oil and food prices, assessing the inflation outlook requires an understanding of how these price changes affect domestic inflation including the indirect or so-called second-round effects. The standard view is that monetary policy should look through transitory supply shocks if there are no observed second-round effects due to the lags in monetary policy transmission. However, looking through supply shocks in the presence of second-round effects may not be optimal since the central bank can bring inflation closer to the target with a corresponding policy response (Bandera et al., 2023). Read more

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Global Supply Chains (GSCs) faced supply disruptions in 2020 and 2021 as pandemic-related lockdowns hindered businesses operating in emerging market economies (EMEs) from meeting the recovering demand in advanced economies (AEs). Multiple waves of COVID-19 infections led to the repeated imposition of pandemic-related restrictions, which in turn delayed the production schedule of manufacturers and limited the operational capacity of critical logistics facilities (ILO, 2020 and Twinn, Qureshi, Conde, & Rojas, 2020).2,3 While certain pandemicrelated disruptions began to ease as economies relaxed quarantine restrictions towards the end of 2021, the escalation of geopolitical tensions in Eastern Europe and the Middle East, along with adverse weather disturbances, further exacerbated and prolonged the supply shocks initially caused by the pandemic. Consequently, this led to a reduction in the availability of raw materials, food commodities, and manufactured goods which contributed to broadened price pressures that affected AEs just as acutely as EMEs. Governments found themselves compelled to implement non-monetary interventions to address the shortfall in supply, while central banks tightened financial conditions to anchor inflation expectations and prevent second-round effects from taking root in their respective economies. Read more