Philippines Central Bank Cuts Rate 25bps to 4.25%

The Bangko Sentral ng Pilipinas cut its overnight borrowing rate 25 basis points to 4.25% from 4.50% and the overnight lending rate to 6.25% from 6.50% previously.  The Bank said: "the inflation outlook remains comfortably within the target range, with expectations well-anchored. Latest baseline forecasts indicate that average annual inflation rates are likely to fall within the lower half of the 3-5 percent target range up to 2013. Pressures on global commodity prices are seen to continue to abate amid weaker global growth prospects. However, the impact of strong capital inflows on domestic liquidity and the effect of geopolitical tensions in the MENA region on global oil supplies will continue to pose upside risks to inflation."

The Philippine central bank held the rate unchanged at its December meeting, and last raised its interest rate in May this year by 25 basis points to 4.50%, and increased reserve requirements by 100bps in July.  The Philippines reported annual consumer price inflation of 4.8% in November, compared to5.2% in October, 4.8% in September, compared to 4.7% in August, 4% in July, 4.7% in June, 4.5% in May and 4.3% in April.  Inflation is currently tracking just inside the Bank's inflation target range of 3%-5%.  

The Phillipine economy grew 0.3% in Q32011 (0.6% in Q2), placing annual GDP growth at 3.2% (3.1% in Q2).  The Philippines Peso (PHP) has gained by about 3% against the US dollar over the past year, with the USDPHP exchange rate last trading around 43.55.

www.CentralBankNews.info