Philippine central bank says it’s not yet convinced about downward inflation trend

THE Philippine central bank needs more data to be convinced that the downward trend in inflation will hold before it considers policy easing, its governor said on Friday (Dec 15).

“The data are not so convincing yet about when it is a good time to start easing,” governor Eli Remolona told CNBC TV.

The Bangko Sentral ng Pilipinas kept its benchmark interest rate steady for a second straight meeting at 6.5 per cent on Thursday, and said policy would have to stay “sufficiently tight” to bring inflation back to target.

While inflation eased for a second straight month to 4.1 per cent in November from 4.9 per cent in October and 6.1 per cent in September, Remolona said: “We are not so convinced that the trend will hold.”

“We need more data to be convinced that we will be within target by 2024,” Remolona said.

Last month’s inflation outcome, which marked the slowest pace of consumer price increases in 20 months in November, brought the average rate over the 11-month period to 6.2 per cent, which was still well outside the central bank’s 2-4 per cent target.

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“For now we are hawkish,” Remolona said.

Economists in the Dec 5 to Dec 11 Reuters poll believed the central bank was done hiking rates, with median forecasts showing policy on hold until the end of the second quarter of 2024, with the next move likely to be a cut. REUTERS