Philippine Central Bank Holds Interest Rate at 4.50%

The Bangko Sentral ng Pilipinas held its overnight borrowing rate unchanged at 4.50% and the overnight lending rate at 6.50%.  However the Bank did increase its required reserve ratio by 100 basis points, effective June 24.  The Bank said: "In deciding to maintain policy rates, the Monetary Board noted that the latest baseline forecasts show a lower path and that inflation expectations have shown some signs of leveling off." ... "Meanwhile, the Monetary Board's decision to raise the reserve requirement is a preemptive move to counter any additional inflationary pressures from excess liquidity. "

Previously the Bank raised its interest rate in May this year by 25 basis points to 4.50%.  The Philippines reported annual consumer price inflation of 4.5% in May, up from 4.3% in April, while core inflation was measured as 3.7%.  Inflation is currently tracking inside the Bank's inflation target range of 3%-5%.

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