Philippines May Align Monetary Policy with Fed’s Rate Cut, Says Finance Chief

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Finance Secretary Ralph Recto suggests that the Philippine central bank could take cues for future monetary policy adjustments from the Federal Reserve, indicating that the current key rate is deemed “high enough.”

Recto emphasized that the timing of the Bangko Sentral ng Pilipinas’s (BSP) rate cut could be influenced by the Federal Reserve’s actions. “Are they going to start reducing rates? If they do, then possibly we can start reducing rates,” Recto, a member of BSP’s policy-making Monetary Board, stated during a press briefing in Manila on Thursday.

The BSP has maintained its benchmark rate at a nearly 17-year high of 6.5% after a series of hikes since May 2022.

Recto also mentioned that the BSP is unlikely to raise the benchmark rate given the decelerating inflation trends. The central bank is scheduled to convene its first policy meeting for the year next week.

In light of spiking rice prices, economic managers are reassessing the government’s gross domestic product (GDP) growth projections for 2024 and beyond, aiming for targets that are “more realistic but still high,” Recto added.