DOF secretary sees ‘long pause’ in rate hikes

June 26, 2023 - 9:08 AM
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Philippine Finance Secretary Benjamin Diokno in Pasay City, Metro Manila, Philippines, July 26, 2022. (Reuters/Lisa Marie David/File Photo)

 Philippine Finance Secretary Benjamin Diokno said he expected the central bank, of which he is a policymaker, to take a “long pause” in raising interest rates steady as inflation is expected to ebb.

The bank held its key policy rate steady at 6.25% for a second straight meeting on Thursday.

“I think we will continue to maintain,” Diokno told reporters on Friday. “It will be a long pause. I don’t see any cut until we really have that strong evidence of a decline” in inflation, Diokno said.

He is one of the seven members of the policy-making Monetary Board, which next meets on Aug. 17 to review policy under the leadership of a new central bank governor.

President Ferdinand Marcos Jr on Friday named board member Eli Remolona as governor of Bangko Sentral ng Pilipinas, replacing Felipe Medalla, who oversaw the central bank’s most aggressive tightening in years.

RELATED: Marcos appoints Monetary Board’s Remolona as BSP governor

Since May last year, the central bank raised rates 425 basis points to combat inflation. It has slowed for four months to 6.1% in May but remains above the bank’s 2%-4% target.

RELATED: Philippine inflation eases for fourth straight month in May

A strong majority in a Reuters poll forecast the bank would stay on hold for the rest of the year, though a few saw a rate cut as soon as year-end.

“Our expectation is inflation could hit below 2% by the first quarter of next year because of the high base effect. That would be the time to consider cuts,” Diokno said.

—Reporting by Neil Jerome Morales; Editing by WIlliam Mallard