Philippine central bank governor rules out easing rates ‘soon’

MANILA – The Philippines’ central bank governor on Wednesday ruled out rate cuts anytime soon due to upside inflation risks and signaled that borrowing costs will remain higher for longer.

Bangko Sentral ng Pilipinas governor Eli Remolona said the central bank wants to be certain inflation will settle comfortably within its 2 percent-4 percent target range.

He said last month’s data showed “it’s still too soon to declare victory” over inflation.

Annual inflation in February picked up for the first time in five months to 3.4 percent on higher food and transport costs.

READ: Inflation breaks 4-month downtrend with 3.4% spike in Feb

“It’s on the edge, so I can’t say that we’re going to ease soon. I think it’s unlikely that we will tighten some more. But we’ll see what the data says,” Remolona told a press briefing.

The central bank chief said rice inflation, which rose to its highest in 15 years last month, was having an “outsized effect” on consumer price expectations.

The BSP has kept interest rates at 6.5 percent for three straight meetings since late last year and will next review policy on April 4. It has raised rates by 450 basis points since May 2022, including an off-cycle move in October.

“The main thing is still whether there are upside risks- supply side shocks- whether there’s going to be more of them and whether they will cause second round effects,” Remolona said.