Bangko Sentral ng Pilipinas (BSP) Governor Felipe Medalla hinted at a possible pause in the central bank’s rate-hiking cycle, citing the deceleration of the domestic inflation rate.
In his presentation during the government’s economic briefing in Washington DC on Wednesday (US time), Medalla said the rate of price increases posted zero expansion from February to March from a 0.3 percent rise in the previous month.
“We think we’re on our way towards our target of 2 (percent) to 4 percent,” he said.
The inflation rate in March slowed down to 7.6 percent on an annual basis from 8.6 percent in the previous month and the 14-year high of 8.7 percent in January.
Average inflation in the first quarter this year stood at 8.3 percent.
The BSP forecast inflation to average 6 percent this year, with the monthly inflation rate decelerating to within-target levels in the last quarter barring any untoward incidents.
For 2024, the BSP’s average inflation forecast is 2.9 percent.
The elevated inflation rate in the country is the primary factor for the total of 425 basis points increase in the central bank’s key rates from May 2022 to March 2023.
“We’re probably pausing in the next meeting because the inflation prints are very good. If April turns to be a very low inflation month, so that’s three good points in a row, we are in the position to pause,” Medalla said.
The next rate-setting meeting of the BSP’s policy-making Monetary Board (MB) is on May 18, the third for the year.
The Philippine Statistics Authority (PSA) is also scheduled to release the April inflation report on May 5.
CURRENTPH NEWS SERVICE