MANILA - The Central Bank of the Philippines, Bangko Sentral ng Pilipinas (BSP) today raised its overnight reverse repurchase rate (RRR) by 25bps to 3.50%, despite soft inflation in May.
“In our view, sustained peso weakness nudged the central bank to hike the policy rate,” ANZ Bank says in a research note. The BSP had marginally lowered its inflation forecast for 2018 to 4.5% from 4.6% earlier.
For 2019, the BSP now expects inflation to average 3.3%, slightly lower than its May projection of 3.4%. It also expects inflation to peak in Q3 2018.