The Bangko Sentral ng Pilipinas (BSP) can keep policy settings unchanged but can consider a rate cut if price pressures continue to ease, its governor said on Monday.
The balance of inflation risks has shifted to the downside and inflation expectations are well anchored, BBSP Governor Eli Remolona told legislators at a budget hearing.
“Evolving inflation conditions show the BSP can hold its policy settings steady for the time being,” Remolona said. “If price pressures continue to ease, it will be possible for BSP to consider a less restrictive monetary policy stance.”
The BSP held its policy rate steady at 6.50 percent for a sixth straight meeting in June, and flagged a possible 25 basis points rate cut in August.
Key economic data are expected to come out this week which would help the BSP in its monetary policy decision on August 15. Inflation data for July will be announced on Tuesday and second-quarter gross domestic product data will be released on Thursday.
Average inflation is projected to fall within the central bank’s 2 percent to 4 percent target in 2024 and 2025, Remolona said.
Inflation averaged 3.5 percent in the first half. Inflation was likely within a 4 percent to 4.8 percent range on an annual basis in July, the central bank said, led by higher electricity rates and prices for agricultural commodities and oil.
