Philippine central bank says restrictive policy settings appropriate

THE Philippine central bank will keep monetary policy settings restrictive as it works to keep inflation in check, as the peso currency weakens in line with global conditions, a senior official said on Thursday (Jun 20).

Despite external headwinds, the Bangko Sentral ng Pilipinas (BSP) remained optimistic that macroeconomic conditions would be favourable in 2024 and 2025, senior assistant governor Iluminada Sicat told a business forum.

Inflation will stay within the target range of 2 per cent to 4 per cent this year and the next, Sicat said.

The central bank’s key policy rate is at a 17-year high of 6.50 per cent after a series of rate hikes last year to tame inflation, which had hit a 14-year peak of 8.7 per cent in January 2023.

The annual inflation rate fell to a low of 2.8 per cent in January 2024, but has since risen to 3.9 per cent in May. The average inflation rate for the first five months of the year was 3.5 per cent.

Sicat said the peso remained influenced by the broad strength of the US dollar. The peso was trading 0.22 per cent lower at 58.77 to the dollar, having weakened earlier to a low of 58.81, a level last seen on June 10. REUTERS