Philippines Commits to Cautious Rate Cuts Amid Ongoing Price Concerns
The Philippine central bank plans careful rate cuts as inflation risks persist despite meeting targets for the first time in three years.
Philippines, Bangko Sentral ng Pilipinas, Inflation, Interest Rates, Economic Growth
Manila: The Philippine central bank is taking a careful approach to rate cuts. They’re keeping an eye on inflation risks, even though they hit their annual target for the first time in three years.
They reported that inflation averaged 3.2% in 2024, which is right where they want it to be. But they’re not getting too comfortable. The Bangko Sentral ng Pilipinas (BSP) is still worried about potential price hikes, especially from geopolitical issues.
In December, consumer prices rose by 2.9% compared to last year, which was the fastest increase in four months. The core inflation rate, which excludes food and energy, also ticked up to 2.8%. So, they’re being cautious about future rate cuts.
Last year, the BSP lowered rates by 75 basis points, starting their cuts before the Federal Reserve. They wrapped up 2024 with another cut in December, but they’re still watching the economic landscape closely.
Governor Eli Remolona mentioned that they won’t let their guard down, even after meeting their inflation target. President Ferdinand Marcos Jr. echoed this sentiment, stressing the need to be prepared for possible price increases.
Inflation was a real challenge in 2023, averaging 6%, which pushed the BSP to tighten monetary policy aggressively. They’re ready to respond to any new data that comes in.
On a positive note, the peso gained some strength against the dollar after the latest data release. However, the stock market took a slight dip.
Experts believe that if inflation continues to rise, the BSP might hold off on further rate cuts in their next meeting. They’re also hopeful that cooling rice prices will help ease inflation moving forward.
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