Impact of Philippine monetary policy tightening to be felt until next year — BSP governor

September 27, 2023 - 5:43 PM

 The economic impact of monetary policy tightening by the Philippine central bank will have a long lag and be felt into next year, Bangko Sentral ng Pilipinas (BSP) Governor Eli Remolona said on Friday.

“The effects of tightening will continue for about three quarters up to the first half of next year. We’ll still see the previous hikes weighing on economic activity in the Philippines. The lags are long,” Remolona said during in an interview with Bloomberg TV.

The BSP kept its key interest rate PHCBIR=ECI steady for a fourth straight policy meeting on Thursday, while signaling its readiness to resume tightening monetary policy at its next meeting in November if inflation pressures persist.

The Philippine economy grew at its slowest pace in nearly 12 years in the second quarter as high inflation and a series of interest rates hikes hurt consumer demand.

Remolona, at the same time, ruled out a rate cut anytime soon.

“Output numbers have to be pretty bad and inflation numbers to be pretty low for us to consider rate cuts next year,” he said in Friday’s interview.

— Reporting by Neil Jerome Morales, additional reporting by Mikhail Flores, Editing by Martin Petty