MANILA (Reuters) – Ahead of a May 18 monetary policy meeting, the Philippines’ finance minister said there was no reason for the central bank to raise rates further as domestic inflation eased.
Treasury Secretary Benjamin Diokno reiterated his opposition to rate hikes to reporters. But he said he was only voicing his opinion and that he was just one of seven Financial Services Commission members each voting in Thursday’s decision.
“Hold on for a moment. That is my opinion. Inflation is low, reserves are huge, the current account deficit is widening, but financially manageable, it is “Thanks to the improving economy and infrastructure spending,” he said. “So, on the whole, there is no reason to raise rates.”
The Central Bank of Pilipina (BSP) has hiked rates by a total of 425 basis points since May last year to combat inflation, but Diokno said the impact is still looming, given that monetary policy often works over the long term. It has not been fully absorbed into the economy, he said. delay.
The Philippines’ annual inflation fell for the third straight month in April to 6.6%.
BSP Governor Felipe Medalla himself said that the trend in inflation, especially month-over-month, “provides an even stronger case” for keeping rates unchanged at the May 18 policy meeting.
Some economists believe that the downward trend in inflation and slowing economic growth provided the basis for the BSP to pause its tightening cycle.
However, the International Monetary Fund said on Friday that risks to inflation remained to the upside and that “a continued tightening bias may be appropriate until inflation is firmly within its 2-4% target range.” rice field.
Reported by Enrico de la Cruz.Editing: Jane Merriman
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