BSP sees no urgency to change monetary policy settings

Bangko Sentral ng Pilipinas (Philstar file photo)

 The Philippines central bank sees “no urgency” to change its monetary policy settings, its governor said on Thursday, after economic growth slowed for a third straight quarter between April and June.

The Bangko Sentral ng Pilipinas (BSP) has kept interest rates PHCBIR=ECI steady at 6.25% at its last two meetings, after nine rate hikes totalling 425 basis points to curb inflation.

When asked if the BSP can continue holding rates, Governor Eli Remolona told Reuters: “It is possible”.

He said the slowdown in second-quarter growth was “a cause for concern because it was not expected”, but added he sees the economy regaining momentum.

The Philippines‘ gross domestic product grew 4.3% in the quarter ending June, government data showed, its slowest growth print in nearly 12 years, due to a contraction in public spending, high inflation, and borrowing costs.

Monetary tightening will bring inflation back to within target range by the fourth quarter, giving the BSP cause for a prudent pause, Remolona told lawmakers earlier on Thursday. Inflation in the seven months to July stood at 6.8%, well outside the central bank’s 2%-4% target for the year.

Remolona said the BSP is comfortable with its interest rate differential with the U.S. Federal Reserve, which in July raised interest rates by a quarter of a percentage point to within a 5.25%-5.50% range.

Rate cuts will happen “eventually” and “at the right time” when inflation gets back firmly to within target, Remolona said.

—Reporting by Neil Jerome Morales; Editing by Kanupriya Kapoor



BSP sees no urgency to change monetary policy settings
Source: Filipino Trend Viral

Post a Comment

0 Comments