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The facade of the Bangko Sentral ng Pilipinas, adorned with a new logo featuring a gold-colored, full-bodied Philippine eagle with wings spread upward and stars positioned above,  at the Bangko Sentral Headquarters in Quezon City on February 9, 2024.Maria Tan, ABS-CBN News

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Bangko Sentral ng Pilipinas

RG Cruz

ABS-CBN News

<div><span dir="ltr" id="isPasted"></span></div><div><br/></div><div><span dir="ltr" id="isPasted"></span></div><p>MANILA (UPDATE) -- Bangko Sentral ng Pilipinas Governor Eli Remolona told Senators that average inflation will be within the 2-4 percent target this year and next year.</p><p>&quot;The balance of risks to the latest inflation outlook has shifted to the downside and this is due largely to the implementation of rice tariff reduction,&quot; Remolona said as he opened the briefing of the Development Budget Coordination Committee, which kicked off the budget deliberations at the Senate.</p><div><strong><a href="https://news.abs-cbn.com/business/2024/8/6/inflation-quickens-to-4-4-percent-in-july-843" id="isPasted">Inflation quickens to 4.4 percent in July as power, fuel, food costs rise</a></strong></div><p>After staying below 4 percent for six months, inflation breached the upper end of the target in July, hitting 4.4 percent as power, fuel, and food costs climbed.</p><p>The BSP earlier said this was expected &quot;due mainly to higher electricity rates and positive base effects.&quot; But starting in August, the BSP said it expects inflation to slow down due largely to lower import tariffs on rice.</p><p>The BSP has kept its benchmark rate at a 17-year high of 6.5 percent since November last year to tame inflation.</p><p>&quot;Monetary policy has evidently helped to tame inflation. This is reflected in our inflation projections,&quot; he added.</p><p>Remolona expects inflation to be stable despite some risks.</p><p>&quot;We do still face some upside risks to inflation. These risks will come from higher domestic prices of food items other than rice, from transport charges, and from electricity rates.&quot; Remolona said.</p><p>&quot;Nonetheless based on the BSP&#x27;s latest surveys inflation expectations are well anchored implying that we have to worry less about 2nd round effects of supply shocks,&quot; he added.</p><div><strong>INTEREST RATE CUTS SOON?</strong></div><p>Senators meanwhile asked the BSP about the country&#x27;s high interest rates and when rate cuts may be expected.</p><p>&quot;On the policy interest rate of 6.5 percent. What is the direction of this because I always read in the papers that the banks are really earning a lot because of this and people are having a hard time because they have to pay high interest rates. What is your policy direction on this? &quot; said Senator Cynthia Villar.</p><p>Remolona explained that high interest rates are intended to tame inflation and that the central bank sets monetary policy based on data.</p><p>&quot;So we intend to ease when the conditions are right--in other words when we feel that inflation has already been tamed,&quot; Remolona said.</p><p>When Villar asked Remolona for a timeline, the BSP chief said he couldn&#x27;t give one. Villanueva however pressed this point and sought more clarity from the central bank.</p><p>&quot;You&#x27;re saying tight yung 6.5 percent interest rate, but what we are looking for perhaps [is] if you can give us clear parameters as to what are you looking for in order to agree that indeed there [is] a need to lower the interest rate,&quot; Villanueva said.</p><p>At this point, Recto gave his own forecast for interest rates, seeing a 25 to 50-basis points cut in the benchmark rate within the year, and more cuts in 2025.</p><p>&quot;I foresee that in the next year and a half, that we could reduce another 100 basis points by next year interest rates. I think inflation is on its way down,&quot; Recto said. </p><p>The BSP Monetary Board is set to meet on August 15 to decide on monetary policy. Remolona earlier said a 50-basis-point reduction is possible within the year and the start of the rate cuts was likely to happen in August.  </p><div><br/></div><div><span class="fr-video fr-deletable fr-fvc fr-dvb fr-draggable" contenteditable="false" draggable="true"><iframe width="640" height="360" src="https://www.youtube.com/embed/S67JPn8rQj0?&amp;wmode=opaque&amp;rel=0" frameBorder="0" allowfullscreen="" class="fr-draggable"></iframe></span><br/></div>

<p>BSP Governor Eli Remolona told Senators that average inflation will be within the 2-4 percent target this year and next year.</p>

BSP Governor Eli Remolona told Senators that average inflation will be within the 2-4 percent target this year and next year.

Inflation to stay within target in 2024, 2025: BSP chief

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Inflation to stay within target in 2024, 2025: BSP chief

RG Cruz,

ABS-CBN News

Published August 13, 2024 02:06 PM PHT

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Updated August 13, 2024 04:49 PM PHT

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