BSP has room to maintain policy settings, governor says

May 6, 2024 - 3:09 PM
(Photo from BusinessWorld)

 The Philippines‘ central bank has leeway to keep policy settings unchanged this month even if the April inflation reading comes in at 4%, its governor said on Monday.

The central bank remains hawkish, but a trend of 3% inflation in the coming months would give the central bank room to cut rates, Bangko Sentral ng Pilipinas (BSP) Governor Eli Remolona told reporters.

The central bank’s next policy meeting is on May 16, following the release of April inflation figures on May 7 and first quarter economic output data on May 9.

Last month, the BSP kept its benchmark rate PHCBIR=ECI steady at 6.50% for a fourth straight meeting.

“We are still hawkish because inflation is still high,” Remolona said, adding the base case for policy was a 25 basis points rate cut in the fourth quarter or first quarter in 2025.

Annual inflation PHPCPI=ECI was likely to come in between 3.5% to 4.3% in April, the central bank said last week. The consumer price index rose an annual 3.7% in March.

Remolona said there were no strong grounds yet for foreign exchange intervention, after the Philippine peso PHP= traded near 18-month lows last week because of the dollar’s strength.

“We were active in small amounts to maintain orderly markets,” he said, adding that the peso is not yet “stressed”.

— Reporting by Neil Jerome Morales; Ediitng by John Mair