Philippine central bank chief eyes less aggressive rate hikes
This comes as the economy slows further in Q2 as consumer spending and investments shrank
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[MANILA] The Philippine central bank will be less aggressive in raising its key interest rate as economic growth slows, according to governor Eli Remolona.
“The weaker growth that we’re seeing means we’ll be less aggressive in trying to tame inflation,” Remolona said in a speech at an Economic Journalists Association of the Philippines forum in Manila on Friday (Aug 14).
Still, the central bank chief said policymakers will need to see “a more convincing downward trend for inflation before we can relax”.
The Philippines is grappling with the weakest expansion and fastest inflation among South-east Asia’s biggest economies, after a graft scandal sapped confidence and the Iran conflict stoked price pressures.
Earlier in August, the government reported that the economy slowed further in the second quarter as consumers cut spending and investment shrank.
Remolona said the 2.3 per cent gross domestic product growth the government reported for the second quarter was “not that bad” because it was based on the estimated expansion of 5.4 per cent a year ago, where a large potion came from spending on flood control projects that did not go as intended.
As such, economic output in the second quarter of last year was “really just 4.6 per cent” and that growth in the three months to June of 2026 was more like 3.2 per cent, Remolona said.
“It makes a big difference in the way we decide monetary policy,” he said.
The central bank will do what is necessary to bring inflation back to its 3 per cent target, he has said.
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It has raised interest rates by 50 basis points in 2026 and is set to hold its next rate-setting meeting on Aug 27.
Remolona told reporters that growth at 3.2 per cent is still weak and that a downward trend in inflation has yet to be established. BLOOMBERG
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