The Bangko Sentral ng Pilipinas is expected to maintain the benchmark policy rates of 4.5 percent in the next two meetings amid the benign inflation environment, a member of the policy-making Monetary Board said Tuesday.
“(I believe) that there will be no change in policy rates until the next two meetings,” MB member Felipe Medalla said during the Conference on Gearing Up for External Competitiveness held at the central bank.
Medalla said indicators on inflation being constantly monitored by monetary authorities “remained stable.”
The board in May 9 cut the policy rates by 25 basis points to 4.5 percent, the first in more than six years, as inflation continued its downward trajectory.
The board in the following week cut the reserve requirement ratios of universal and commercial banks by 2 percentage points to 16 percent. It was complemented by a 200-basis points reduction in RRR on May 23 for thrift bank and non-bank financial institutions with quasi-banking functions, as well as 100 bps cut for demand deposits of rural and cooperative banks effective May 31.
Inflation peaked to a nine-year high of 6.7 percent in September and October 2018, on higher prices of rice and other food commodities. But it eased to 6 percent in November and 5.1 percent in December as the immediate measures implemented by the government to curb rising prices took effect, bringing the full-year average to 5.2 percent.
Inflation further eased to 4.4 percent in January, 3.8 percent in February, 3.3 percent in March and 3 percent in April.
Inflation in May rose to 3.2 percent from 3 percent a month ago, on higher prices of food and non alcoholic beverages stoked by El Niño phenomenon.
The May figure brought inflation in the first five months to 3.5 percent, well within the target range of 2 to 4 percent for the year.
In the same forum, International Monetary Fund resident representative to the Philippines Yongzheng Yang said the US Federal Reserve was unlikely to raise interest rates in the near term, which could be mirrored by other countries.
“The outlook now is, there are a lot of uncertainties because there are many downside risks globally… This is a very uncertain world right now,” Yang said.
Yang said the policy decisions of countries in the world should be aimed at preventing further economic slowdown, flexibility of the exchange rate, structural reforms to boost medium-term growth and policy should always be data dependent.
Yang said the lingering trade war between US and China would negatively impact on most countries in the world, adding “when big countries fight, small countries suffer and suffer more.”