Thursday, the Philippine central bank maintained its key interest rate and decided to phase out liquidity-enhancing crisis response measures.
The monetary board of the Bangko Sentral ng Pilipinas kept its overnight borrowing or reverse repurchase rate at 4% and the overnight lending or repurchase rate at 6%. Interest rates on term reverse repurchase and repurchase and special deposit accounts were also left unchanged. BSP policymakers said the current interest rate policy is appropriate.
"We forecast that the first hike will come in early June, once May's presidential and congressional elections are out of the way," said Ashira Perera, an economist at Capital Economics.
The rate-setting board also decided to phase out liquidity-enhancing crisis response measures, effective 15 March 2010. The board decided to reduce the peso rediscounting budget from PHP60 billion to PHP40 billion.
It also agreed to restore the loan value of all eligible rediscounting papers from 90% to 80% of the borrowing bank's credit instrument, as well as bring back the non-performing loan ratio requirement of two percentage points from ten percentage points above the latest available industry average non-performing loan for banks wishing to avail of the rediscounting facility.
In January, the monetary board also decided to set the peso rediscount rate equal to the overnight reverse repurchase rate and approved a peso rediscount rate that was 50 basis points lower than the overnight reverse repurchase rate. The latter is part of a package to liberalize banks' access to the BSP's rediscounting facility and ensure the orderly operation of domestic financial markets.
According to the central bank, the inflation outlook remains manageable, with the latest BSP baseline projections indicating within-target inflation in 2010 and 2011 as demand-side pressures remain modest and inflation expectations well-contained. The monetary board will act decisively and adjust monetary policy settings accordingly if and when the second-round effects of supply shocks become evident, the central bank said in a statement.
Meanwhile, the current movements of asset prices, particularly in the equities and property markets, do not appear to pose any significant short-term challenges to the economy, the bank said. Further, the central bank said recent indicators suggest increasing momentum in domestic economic activity.
Moreover, latest export numbers have been quite strong, and export growth is likely to gain more traction as the global economic outlook improves, the bank said. Philippines' gross domestic product expanded a seasonally adjusted 0.9% sequentially in the fourth quarter, faster than the downwardly revised 0.8% growth in the third quarter.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.