Philippine central bank signals pause in rate hikes in May

MANILA (Reuters) – The Philippines’ central bank could pause its interest rate- hiking cycle at its meeting next month due to easing inflation, its governor said on Wednesday.

“We are probably pausing in the next meeting because the inflation prints are very good,” Bangko Sentral ng Pilipinas (BSP) Governor Felipe Medalla said in a briefing in Washington aired live on Facebook.

Tempered inflation in April puts monetary authorities in a position to pause policy, Medalla said, adding that the inflation average for 2023 will be revised downwards from the 6% projection.

The Philippine central bank next meets on May 18 to set benchmark interest rate [PHCBIR=ECI], which it has raised by 425 basis points since last year to 6.25%.

The BSP was Asia’s most aggressive central bank in raising interest rates to combat elevated inflation and keep up with the U.S. Federal Reserve’s tightening cycle.

The Fed’s actions are still relevant but less of a factor in its decision making, Medalla said, adding that monetary policy is largely driven by inflation.

Philippine annual inflation [PHCPI=ECI] hit 7.6% in March, its second consecutive month of easing, giving the BSP leeway to pause in its monetary tightening cycle.

(Reporting by Neil Jerome Morales; editing by John Stonestreet and Bernadette Baum)