00:00The Banco Centralang Pilipinas has lowered its key interest rate by 25 basis points,
00:05the 5.75% in a move aimed at balancing inflation concerns while fostering economic growth.
00:13Our Noel Talacay dwells on this in this report.
00:18In a landmark decision today, the Monetary Board of the Banco Centralang Pilipinas announced
00:24a 25 basis point reducing in the Target Reverse Reportage or RRP rate, widely known as interest
00:32rate, bringing it down to 5.75%.
00:36Adjustment to the overnight deposit and lending facilities followed suit, setting at 5.25%
00:43and 6.25% respectively.
00:47The reason we're cutting in baby steps is because we're not absolutely sure about inflation.
00:55We still worry that inflation might start to rise again and by cutting in baby steps,
01:03at this point we're still somewhat tight, somewhat tight, so that's kind of insurance
01:09against a possible increase in inflation.
01:12However, the risk-adjusted inflation forecast for 2025 edged slightly higher to 3.4% from
01:20the previous 3.3% while the forecast for 2026 remains unchanged at 3.7%.
01:28The board warned the balance of risk to the inflation outlook still leans to the upside,
01:33driven by potential increases in transport fares and electricity rates.
01:39On the other hand, lower import tariffs on rice could exert downside pressure on prices.
01:45Domestic demand is expected to remain steady but subdued, supported by easing inflation
01:51and improvements in the labor market.
01:53However, BSS, global headwinds, and external risks could dampen economic activity and market
02:00sentiment.
02:01On balance, the within-target inflation outlook and well-anchored inflation expectations continue
02:09to support the BSP's shift toward less restrictive monetary policy.
02:17Nonetheless, the monetary authority will continue to closely monitor the emerging upside risks
02:26to inflation, notably geopolitical factors.
02:30This move is expected to benefit households, businesses, and the broader economy particularly
02:36as inflation continues to moderate and the job market shows signs of improving.
02:42Looking ahead, the Monetary Board of the Banko Sentral ng Pilipinas vowed to take a measured
02:48approach to further easing to ensure that price stability is maintained while promoting
02:54sustainable economic development, growth, and employment.
02:58Noel Talaca from the National TV Network, for New and Better Philippines.
