Inflation slowdown may prompt BSP to pause rate hikes
MANILA, Philippines — There’s a chance that the Bangko Sentral ng Pilipinas would pause its rate hikes in May if inflation won’t quicken this month, Governor Felipe Medalla said.
In a Monday report by Reuters, Medalla was quoted as saying that the BSP might not lift rates at the Monetary Board’s May 18 meeting “if the April CPI (consumer price index) is not higher than the March CPI”.
Medalla added a “zero or negative month-on-month inflation” would further convince monetary authorities to pause its tightening.
The Philippine Statistics Authority reported last week inflation settled at 7.6% year-on-year in March, slower compared to the 8.6% year-on-year reading in February.
Despite this, core inflation remained to be a persistent headache for consumers and policymakers alike. Computed without volatile items such as fuel, core inflation rose to 8% in March, its highest level since 1999.
The persistent trend of rising core inflation could still compel the BSP to inject another hike. But some analysts also believe keeping the benchmark rate at the current level 6.25% would be enough for now to minimize the tightening moves’ damage to economic growth.
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