Philippine central bank Governor Felipe Medalla said he sees space for a quarter-point move at the next monetary policy review, amid expectations for inflation to start cooling.
(Bloomberg) — Philippine central bank Governor Felipe Medalla said he sees space for a quarter-point move at the next monetary policy review, amid expectations for inflation to start cooling.
There may be one more increase, Medalla said at an event in Manila on Friday. A 25-basis-point hike is the most likely option, said the central bank chief, while adding that high month-on-month inflation may prompt a bigger move.
Medalla, however, said there’s “great possibility” that inflation already peaked in January, while Finance Secretary Benjamin Diokno separately said at the same event that price gains have definitely slowed in February. Just last week, Medalla expressed concern that persistent price pressures may become entrenched, which he said could merit more rate hikes.
While many central banks including the Federal Reserve have slowed the pace of monetary tightening to quarter-point increments, Bangko Sentral ng Pilipinas has so far stuck to outsized moves to tame an unexpected surge in inflation. A downshift to 25 basis-point increment will align the BSP’s rate action with peers, some of whom have already opted to pause.
With inflation still at a 14-year high of 8.7% as of January, Medalla said he’s hoping to be pleasantly surprised by the consumer-price trajectory. The expectation is it for price gains to decelerate to 4% by November or December, he said.
Medalla said he hopes non-monetary measures will become more effective in putting a lid on price-growth. His comments follow earlier remarks by Diokno that monetary authorities have done their part, and that direct measures to address supply issues were needed to fight inflation.
Philippines Signals More Rate Increases as Indonesia Pauses (2)
Within Southeast Asia, the Philippines’ monetary path has diverged from peers such as Indonesia and Malaysia, where authorities have paused amid signs of easing inflation. Elsewhere in Asia, India is grappling with persistent price pressures, although the Reserve Bank of India has slowed its rate action to 25 basis points.
–With assistance from Zoe Schneeweiss.
(Adds central bank, finance chiefs’ comments from 2nd paragraph.)
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