Philippine central bank cuts policy rate, says outlook uncertain
FILE PHOTO: A logo of the Bangko Sentral ng Pilipinas (Central Bank of the Philippines) is seen at their headquarters in Manila, Philippines April 28, 2016. REUTERS/Romeo Ranoco/File Photo
MANILA, Feb 19 : The Philippine central bank cut its key rate for a sixth straight time on Thursday to support growth, adding that the outlook for policy depends on how quickly confidence in the economy returns.
The move to lower the overnight reverse repurchase rate by 25 basis points to 4.25 per cent came after economic growth slowed to a near five‑year low of 3.0 per cent last quarter. That matched the expectations of most economists in a Reuters poll.
Bangko Sentral ng Pilipinas (BSP) Governor Eli Remolona said the central bank had underestimated the economic impact of the decline in investor and consumer confidence brought about by a corruption scandal late last year.
He said much of the BSP's decision-making would depend on how fast confidence recovers, but stressed that the central bank would continue to support growth to the extent that inflation allows.
"We're less certain about how soon confidence will return," Remolona told a press conference. "We also realise that the effect of it, it's bigger than we thought. So you combine those two things, that makes us less certain of where the economy is heading in the next quarter or so."
The Philippine peso was largely unchanged against the U.S. dollar and the benchmark stock index also hardly moved following the policy announcement.
The Philippine central bank forecast growth to recover to 4.6 per cent this year from 4.4 per cent last year, and accelerate further to 5.9 per cent in 2027.
It said the outlook for inflation remained manageable, with the forecasts of 3.6 per cent for 2026 and 3.2 per cent for 2027 falling within its 2 per cent to 4 per cent target.
