The Philippines central bank left its benchmark interest rate unchanged for a second straight policy meeting, while cutting inflation forecasts for this year and next.
The overnight reverse repurchase rate was held at 4.75 percent, Bangko Sentral ng Pilipinas said in a statement in Manila. The decision was in line with the forecasts of all 22 economists surveyed by Bloomberg.
The central bank trimmed its inflation forecasts for this year and next, expecting the average price gains in 2019 to move closer to the mid-point of the 2 percent to 4 percent target range at 3.07 percent from a 3.18 percent estimate in December. Inflation has slowed rapidly this year to reach a 10-month low of 4.4 percent in January after breaching the central bank’s target band in 2018.
Assistant Governor Francis Dakila said during the briefing that consumer price gains could cool to below 4 percent by March. With the US Federal Reserve signaling it will pause its rate-hike cycle, emerging markets across Asia are rebounding, enabling central banks to dump their hawkish policy stances.
But in the Philippines, authorities remain cautious on inflation and Deputy Governor Diwa Guinigundo said earlier this week that they need “the benefit of time and more observations” before loosening policy settings.
Bangko Sentral was among the most aggressive interest-rate hikers in Asia last year, boosting its benchmark rate by 175 basis points, to curb inflation and bolster the currency.
“Bangko Sentral ng Pilipinas is likely to continue to keep its policy rate on pause into 2Q, in our view.