Philippine central banker’s remark on prices keeps hikes in play

Manila: Bangko Sentral ng Pilipinas Governor Eli Remolona said upside risks to inflation persist, in comments that indicate the monetary authority is open to further tightening.

Core inflation is still high and there are still upside pressures, he said at a banking event in Manila on Friday. The core measure - which strips out volatile food and fuel costs - came in at 7.4 per cent in June, down from 7.7 per cent in May and 7.9 per cent in April.

Remolona’s signal is consistent with his earlier remarks that the central bank’s policy path will be guided by inflation data, with cuts out of the question as long as price gains are above target. He’s scheduled to deliver his first monetary policy decision as BSP chief on August 17.

The BSP has stood pat in the past two meetings, after lifting the key rate by 425 basis points to a 16-year high. Inflation, while for now decelerating, still remains above the central bank’s 2 per cent to 4 per cent target.

The new central bank head has made it clear that it’s “premature” to discuss cutting rates, noting that such a move is only likely once inflation is already “well into” the target. During his first weeks in office, Remolona repeatedly described the BSP as “structurally hawkish” and emphasized its inflation-targeting role.

The Philippine economy is among the bright performers in Asia, supported by robust consumer spending even amid elevated prices and a gloomy global outlook. President Ferdinand Marcos Jr.’s government is aiming for 6 per cent to 7 per cent economic growth this year.