22-8-2023 (MANILA) The Philippine central bank, Bangko Sentral ng Pilipinas (BSP), has no immediate plans to ease monetary policy due to concerns about potential inflationary pressures, according to BSP Governor Eli Remolona.
During a meeting with newspaper editors, Remolona emphasized that the BSP is cautious about making sudden policy changes, as such actions can lead to uncertainty. The central bank has maintained its benchmark interest rate at 6.25 percent for three consecutive meetings. This comes after a series of rate hikes totaling 425 basis points over the past year. The BSP is carefully balancing the need to stimulate economic growth while keeping inflation under control.
Remolona explained that the BSP’s policy decisions will depend on incoming data. When asked about the possible impact of further interest rate increases by the U.S. Federal Reserve at its upcoming meeting, Remolona stated that the BSP would take a data-driven approach to respond effectively. The BSP’s next policy review is scheduled for September 21.
However, the majority of economists polled by Reuters between August 14-18 believe that the Federal Reserve is unlikely to raise interest rates further. This aligns with Remolona’s statement.
Regarding economic growth, Remolona mentioned that the BSP anticipates growth for the year to fall within the government’s target range of 6 percent to 7 percent. This projection remains in place despite the slower expansion observed in the second quarter.
Looking ahead, Remolona indicated that there could be potential for a further reduction in the reserve requirement ratio (RRR) later in the year. In June, the RRR for major lenders was lowered by 250 basis points to 9.5 percent as a countermeasure to the conclusion of liquidity-enhancing relief measures for banks during the pandemic.
