MANILA, Dec. 19 (Xinhua) -- The Philippine central bank Thursday said it decided to cut its target reverse repurchase rate by 25 basis points to 5.75 percent and adjusted the interest rates on the overnight deposit and lending facilities to 5.25 percent and 6.25 percent, respectively.

"Inflation is projected to stay within the target range over the policy horizon," Bangko Sentral ng Pilipinas (BSP) Governor Eli Remolona told a press conference, adding the risk-adjusted inflation forecast for 2025 has risen slightly to 3.4 percent from 3.3 percent in the previous meeting of the BSP Monetary Board.

For 2026, Remolona said the risk-adjusted forecast is unchanged at 3.7 percent, and that inflation expectations remain well-anchored.

"The balance of risks to the inflation outlook continues to lean to the upside due largely to potential upward adjustments in transport fares and electricity rates," said Remolona, adding that the impact of lower import tariffs on rice remains the main downside risk to inflation.

Remolona said the monetary board has noted that domestic demand "is likely to remain firm but subdued."

"Private domestic spending is expected to be supported by easing inflation and improving labor market conditions," he said.

However, downside risks in the external environment could materialize and temper economic activity and market sentiment, he mentioned.

Remolona said the within-target inflation outlook and well-anchored inflation expectations continue to support the BSP's shift toward "a less restrictive monetary policy."

Looking ahead, he said the monetary board will maintain a measured approach to monetary policy easing to ensure price stability conducive to sustainable economic growth and employment. Enditem

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