UOB’s Global Economics & Markets Research, via Julia Goh and Loke Siew Ting, notes that the Philippine central bank, the Bangko Sentral ng Pilipinas (BSP), maintained the Reverse Repurchase Rate (RRP) at 4.25% at its off-cycle meeting amid supply-driven inflation and intensifying threats to the Middle East. The bank expects the monetary policy break to be extended, with core inflation and second-round effects playing a greater role in decision-making and fiscal policy.
The BSP was observed during a prolonged hiatus from politics
“Given the fluid situation and uncertainty about the duration and severity of the conflict in the Middle East, we maintain a cautious stance and continue to expect no further changes to RRP rates at this time.”
“Continued weak domestic demand combined with elevated costs of living support an extension of the policy pause, with fiscal measures likely to play a greater role in mitigating the economic impact of the conflict in the Middle East.”
“In summary, we expect the BSP to maintain a meeting-based approach while closely monitoring external developments.”
“During his post-meeting briefing, the BSP Governor did not rule out the possibility of holding additional meetings outside the cycle in the event that the conflict in the Middle East escalates and poses more immediate economic risks.”
“He also noted that the BSP stands ready to inject liquidity into the financial system as needed and may further reduce the reserve requirement ratio (RRR), potentially to around 2.00%.”
(This article was created with the aid of an artificial intelligence tool and has been reviewed by an editor.)
