6-3-2024 (MANILA) Bangko Sentral ng Pilipinas governor Eli Remolona asserted on Wednesday that rate cuts are not on the horizon anytime soon, citing potential upside risks to inflation and signaling a prolonged period of higher borrowing costs.
Remolona emphasized the central bank’s commitment to ensuring that inflation comfortably settles within the 2%-4% target range. Despite a recent pickup in annual inflation to 3.4% in February, driven by increased food and transport costs, Remolona stated that it is premature to declare victory over inflation.
During a press briefing, Remolona highlighted the impact of rising rice inflation, reaching its highest level in 15 years last month, on consumer price expectations. He noted that this factor has an “outsized effect” on the overall inflationary environment.
The Bangko Sentral ng Pilipinas has maintained interest rates at 6.50% for three consecutive meetings since late 2023 and is set to review its policy on April 4. The central bank has implemented rate hikes totaling 450 basis points since May 2022, including an off-cycle move in October.
Remolona emphasized the central bank’s focus on evaluating potential upside risks, particularly supply-side shocks, and assessing whether they might lead to second-round effects on inflation. He expressed caution about the possibility of easing soon, given the current inflationary landscape.
