Philippines central bank maintains benchmark interest rate at 6.25%

The interest rates on the overnight deposit and lending facilities were retained at 5.75 per cent and 6.75 per cent respectively.

Latest baseline projections continue to show a return to inflation target in the fourth quarter this year despite a generally higher path for inflation relative to the previous forecast from the monetary policy meeting in June, reflecting mainly the impact of higher international oil prices, an official release said.

Average inflation this year is seen to reach 5.6 per cent, while the average inflation forecasts for 2024 and 2025 now stand at 3.3 per cent and 3.4 per cent respectively.

Meanwhile, inflation expectations for 2023 have remained steady, while those for 2024 and 2025 have declined slightly.

Nonetheless, the balance of risks to the inflation forecast continues to lean towards the upside, the release noted.

A weaker-than-expected global economic recovery remains the primary downside risk to the inflation outlook.

The monetary board also recognised the challenging outlook for economic growth, as the weaker gross domestic product (GDP) outturn for the second quarter of 2023 reflected a broad-based slowdown in domestic demand.

Household consumption slowed due to elevated commodity prices, while government spending contracted relative to the previous year.

Authorities noted that the strength of economic activity going forward is likely to moderate as pent-up demand wanes and the full impact of prior monetary policy tightening continues to manifest.

Fibre2Fashion News Desk (DS)