Philippine central bank stays hawkish on policy

Bloomberg

The Philippines central bank remains guarded on monetary policy and is keeping a hawkish bias, Deputy Governor Diwa Guinigundo said, indicating it’s not ready to cut interest rates just yet. “We are more on the hawkish side in the sense that we recognize the risks on the market,” he said in an interview with Bloomberg TV’s Nejra Cehic from Osaka, where Philippine officials held a briefing for investors.
“We recognize the possibility of oil prices surging again,” the deputy governor said. “We are trying to be more cautious about these potential risks that could impinge on our ability to maintain price stability.”
Bangko Sentral ng Pilipinas, which presided over one of Asia’s most aggressive tightening cycles last year, hasn’t dialed down its rhetoric. In contrast, the odds of a rate cut in Indonesia are boosted after Governor Perry Warjiyo toned down his stance. The Philippines raised the key rate by a total of 175 basis points last year after higher prices of fuel, rice and taxes pushed inflation to a nine-year high.
Last year’s rate increases won’t be a drag to the economy, Finance Secretary Carlos Dom-inguez said in a separate Bloo-mberg TV interview in Osaka. The government is “stepping on the gas” for its $170 billion infrastructure program as the central bank paused its tightening cycle, he said.