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June 23, 2024

BSP adopts watchful approach during pause rate hike

The Bangko Sentral ng Pilipinas is taking a vigilant stance as it temporarily pauses its policy rate hikes to closely monitor the country’s economy and financial sector.

Following an impressive streak of nine consecutive increases, the BSP has opted to maintain its overnight reverse repurchase (RRP) rate at 6.25 percent, signifying a departure from its prior tightening trajectory. This strategic pause allows the central bank to carefully evaluate the evolving macroeconomic and financial conditions before making any further adjustments.

While acknowledging the absence of substantial evidence pointing to asset price bubbles or overextended market valuations within the domestic landscape, the BSP underscores the importance of cautious monitoring to prevent the accumulation of financial imbalances, particularly against the backdrop of the current record-high interest rate environment.

The overnight deposit and lending facility rates have also been held steady at 5.75 percent and 6.75 percent, respectively.

The BSP’s decision to maintain the existing interest rate level aligns with its unwavering commitment to upholding financial stability. This approach takes into account factors such as steady liquidity and credit growth, as well as the commendable lending practices of banks toward businesses and households during the first and second quarters of 2023.

Additionally, the central bank acknowledges the influence of tighter global financial conditions, which play a role in shaping its decision-making process.

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