Central Bank Interest Rate Policy Directive

The Central Bank of the Philippines is constitutionally mandated to provide policy direction in areas of money, banking and credit.
The Central Bank is directed by its charter to regulate the volume, costs, availability and character of bank credit and to provide liquid funds in times of need.
Certain prior executive issuances that fixed ceilings, loan values and rediscount rates have hampered interest rate reforms and monetary management.
Executive Order No. 698 establishes that ceilings and rates previously set by executive issuances are subject to modification by the Central Bank’s Monetary Board when warranted by prevailing economic conditions.

Section 1 makes the ceilings, loan values and rediscount rates of the Central Bank—when prescribed or fixed in Letters of Instructions and other executive issuances—directory rather than mandatory.
Section 1 provides that those ceilings, loan values, and rates may be modified by the Monetary Board.
Section 1 limits modification authority to instances when modification is warranted by prevailing economic conditions.
Section 1 covers:
- ceilings and rates for preferential rediscounting, and
- the lending rates that banks may charge on paper rediscounted with the Central Bank.

The Monetary Board may modify the prior executive-issuance ceilings, loan values, and rediscount rates under Section 1.
Modification by the Monetary Board must be done in accordance with the Central Bank’s Charter under Section 1.
Section 1 ties modification to prevailing economic conditions.
Section 1 treats previously fixed executive-issuance values as subject to change, not fixed permanently.

Section 2 repeals or modifies accordingly all issuances and regulations inconsistent with Executive Order No. 698.
Section 2 applies the repeal/modification rule to inconsistent issuances and regulations, thereby ensuring alignment with the directory rule in Section 1.
Section 2 confirms continuity of authority for Central Bank action consistent with its Charter under the modified framework.