Philippine central bank Governor Eli Remolona said a rate cut is possible “within the year” but added that it’s unlikely for it to happen in the first half.

“Maybe first semester is too soon,” Remolona told reporters on the sidelines of a central bank event on Friday, when asked on the time frame of a possible monetary easing.

The Bangko Sentral ng Pilipinas (BSP) chief has kept a cautious tone despite easing inflation, amid persistent price threats including rice costs. The central bank’s key interest rate is near a 17-year-high of 6.5 per cent, after its most aggressive tightening campaign in two decades.

Remolona said growth of the South-east Asian economy in the fourth quarter was likely better than the third quarter, adding “if the growth is strong, that gives us a bit more room to hike.” The central bank remains hawkish, he said.

Finance Secretary Ralph Recto said at the same event that he expects interest rates overall to ease this year, citing market consensus.

“We expect interest rates to go down in the second half,” said Recto, who sits in the BSP’s policy-setting board, referring to both US and Philippine rates. 

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Remolona separately said on Friday that the central bank would like to further enhance its monetary policy framework by sharpening its research and models to be more responsive to price pressures, particularly when there are supply shocks. 

The BSP is also aiming to strengthen its systemic risk oversight, and to deepen capital markets to diversify sources of funds, the governor said.

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