MANILA (Reuters) – The Philippine central bank sees no reason to raise interest rates further as domestic inflation is moderating, the Philippine finance secretary said ahead of a May monetary policy meeting.
Finance Minister Benjamin Diokno reiterated his opposition to rate hikes in an interview with reporters. But he said he was merely expressing his opinion and was just one of seven currency board members who will each vote in Thursday’s decision-making process.
“I pause for a moment, this is my opinion. Inflation is falling, huge (forex) reserves, current account deficit has widened but is financially manageable due to improving economy , infrastructure spending,” he said. “So in general, we have no reason to raise rates.”
The Philippine Central Bank (BSP) has raised rates in total since last May Cracking down on inflation, Diokno said, the full impact has yet to be absorbed by the economy, given that monetary policy typically has a long lag.
Annual inflation in the Philippines eased to 6.6% in April for the third straight month.
BSP President Felipe Medalla himself has said that the monthly inflation trend in particular “makes a stronger case” for keeping rates on hold in May 18 Policy meeting.
Some economists believe that the downward trend in inflation and cooling economic growth have justified the suspension of the BSP
However, international currencies The IMF said on Friday that with inflation risks remaining on the upside, “it may be appropriate to continue tightening policy until inflation falls significantly within the 2-4% target range”.