New Philippine central bank Governor Eli RemoLona signaled that further tightening of monetary policy is still under consideration for the country. He mentioned that it’s “premature” to discuss reducing the key rate. The Bangkok Sentral ng Pili pinas is closely monitoring inflation risks, such as El Nino and wage increases, and remains on the “tightening side.”
Governor RemoLona revealed this during his first Bloomberg Television interview in Canada. Currently, the central bank is evaluating whether to implement a rate hike or not, rather than contemplating rate cuts. Additionally, they are keeping a close eye on any significant fluctuations in the Philippine peso, particularly if the US Federal Reserve enacts further monetary tightening. So far, the Philippine peso has strengthened and performed well compared to other currencies in the region this year.
The central bank chief highlighted that the Philippine economy remains “very strong.” However, they would like to observe the impact of their most aggressive tightening cycle in two decades, which has raised the key rate to a 16-year high, on the country’s growth.
Regarding the possibility of a rate cut, Governor Remo Lona stated that it might be considered if inflation were to be well within the central bank’s target range of 2% to 4%, or in the event of a global recession. Despite easing for five consecutive months, headline inflation stood at 5.4% in June, still significantly above the target range.