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Philippines Policy Rate 6.5% (consensus 6.5%) in May-24

• The BSP maintained its policy rate at 6.5%, aligning with the consensus forecast, reflecting a balanced approach amid persistent inflationary pressures and moderated economic activity.
• While the inflation forecast for 2024 eased slightly to 3.8%, the forecast for 2025 increased to 3.7%, indicating persistent inflation risks from higher transport, food, electricity, and oil prices.
• The BSP's restrictive policy stance aims to anchor inflation expectations and ensure price stability, with readiness to adjust policy settings as necessary, supported by government measures to address supply-side pressures.

Philippines CPI Inflation 3.8% y-o-y (consensus 4.1%) in Apr-24

- Philippines CPI inflation in April 2024 registered at 3.8% y-o-y, below the consensus forecast of 4.1% and showing a moderation compared to the previous period.
- The current CPI inflation rate represents the highest growth rate since December 2023 and is 0.72 percentage points below the one-year average, indicating relatively lower price growth in the economy. Additionally, it is 1.75 percentage points below the long-run average, signaling a significant deviation from the historical trend.

Philippines Policy Rate 6.5% (consensus 6.5%) in Apr-24

• The BSP’s decision to maintain the policy rate at 6.5% reflects a strategic response to a modest uptick in inflation forecasts and the challenge of balancing inflation mitigation with economic growth, indicating a cautious yet proactive approach to monetary policy management.
• Despite the upside risks to inflation, particularly from supply-side pressures, the Monetary Board’s confidence in keeping inflation expectations anchored assumes the effectiveness of the current policy stance in maintaining inflationary stability.
• The BSP’s emphasis on economic growth prospects and its readiness to adapt policy settings in response to shifting economic and inflationary landscapes highlight a commitment to flexible and forward-looking monetary policy, ensuring price stability and sustained economic health.

Philippines CPI Inflation 3.4% y-o-y (consensus 3.1%) in Feb-24

- Philippines CPI inflation surpassed market expectations by rebounding to 3.4% year-on-year in February 2024.
- Although that is only the highest level since December 2023, it breaks a downtrend as it rises towards the core rate, which is where the upside news appeared.