SINGAPORE • The Philippines central bank will consider easing monetary policy only when inflation nears the mid-point of its target, deputy governor Diwa Guinigundo (picture) said.
“You don’t risk generating the pressures on inflation by either reducing the reserve requirement or bringing down the policy rate immediately,” Guinigundo said in an interview in Chiang Rai in Thailand yesterday.
While inflation cooled for four consecutive months to 3.8% in February, this year’s average remains above the bank’s 2% to 4% annual target.
Easing prices also stoked bets that the central bank could cut lenders’ reserve requirement ratio.
“If the trend continues, then it’s only after that that one talks about monetary space or the flexibility to bring down the policy rates,” Guinigundo said.
Consumer-price growth slowed to 3.5% in March, according to a Bloomberg survey before today’s data release.
Bangko Sentral ng Pilipinas joins Bank Indonesia in adopting a cautious stance in dialing back aggressive rate hikes last year.
In the Philippines, policymakers raised the key rate by a total 175 basis points between May and November 2018 to damp price increases.
Last year’s rate increases have yet to take root, Guinigundo said, citing a 12- to 18-month monetary policy lag.
Swings in global oil prices and a prolonged El Niño dry spell are upside risks to inflation, he said. — Bloomberg