MANILA, May 18 (Xinhua) -- The Philippine central bank on Thursday decided to keep the interest rate on the overnight reverse repurchase facility at 6.25 percent, and the interest rate on the overnight deposit and lending facilities at 5.75 percent and 6.75 percent, respectively.
"Based on the sum of new information and its assessment of the impact of previous monetary policy actions, the Monetary Board decided that a pause in monetary policy tightening was appropriate," Bangko Sentral ng Pilipinas (BSP) Governor Felipe Medalla told a news inference.
He said the BSP's latest baseline projections reflect a gradual return of inflation to the target band of 2 to 4 percent over the policy horizon.
"Average inflation for 2023 is now projected to settle at 5.5 percent, lower than 6 percent previously, while the average inflation forecast for 2024 fell slightly to 2.8 percent," Medalla said.
According to the head of central bank, the Monetary Board also noted that while the gross domestic product growth has remained robust in the first quarter of 2023, demand indicators have also pointed to a potential moderation in recent months.
Medalla said the impact of a weaker-than-expected global economic recovery continues to be the primary downside risk to the outlook.
"Given these considerations, the Monetary Board deems it prudent for the BSP to take a pause in monetary policy tightening while remaining ready to respond to emerging threats to inflation," Medalla said.
He added that the Monetary Board also deems it necessary to keep the policy interest rate at its current level over the near term as ongoing price pressures warrant close monitoring. ■
