MANILA — The Philippines central bank could look at cutting rates if price pressures continue to ease, its governor said on Monday, saying the balance of risks on inflation had shifted to the downside.
Speaking to legislators at a budget hearing a day ahead of July inflation data, Bangko Sentral ng Pilipinas (BSP) Governor Eli Remolona said inflation expectations were well anchored.
“Evolving inflation conditions show the BSP can hold its policy settings steady for the time being,” Remolona said. “If price pressures continue to ease, it will be possible for BSP to consider a less restrictive monetary policy stance.”
The central bank held its policy rate steady at 6.50% for a sixth straight meeting in June, and flagged a possible 25 basis points rate cut in August.
Remolona told lawmakers the BSP does not have a target rate for the peso, and intervenes to prevent stress in the foreign exchange market and when the currency has diverged from fundamentals.
The Philippine peso PHP= traded at its strongest level in two months against the U.S. dollar on Monday, as global markets were roiled by concerns of a U.S. recession.
Inflation data on Tuesday and economic growth figures on Thursday will help the BSP finalize its policy decision at its Aug. 15 review.
The central bank expects the price data to show annual inflation PHCPI=ECI within a 4.0% and 4.8% range in July, compared with a rate of 3.7% in June. Inflation averaged 3.5% in the first half of the year. Remolona said average inflation is projected to fall within the central bank’s 2% to 4% target in 2024 and 2025.
—Reporting by Mikhail Flores; Editing by Martin Petty and John Mair
