Philippines central bank chief hints at cutting rates

Bloomberg

Philippine central bank Governor Benjamin Diokno said it would be better to cut interest rates sooner than later, a signal that policy makers will likely lower borrowing costs on Thursday.
Since monetary policy works with a lag and the central bank is mindful of risks to global growth from the coronavirus outbreak, it’s preferable to act the “sooner the better,” Diokno said on Wednesday in Manila.
Diokno chairs the seven-member rate-setting board at Bangko Sentral ng Pilipinas, which is seen lowering its key interest rate by 25 basis points on Thursday to 3.75%, according to most economists in a Bloomberg survey. The rest see no change.
The governor said he still sees 50 basis points of rate cuts this year, reiterating guidance he’s previously given. The central bank lowered its key interest rate by 75 basis points last year as inflation slowed.
Diokno said he’s confident the economy can reach 6.5% growth this year despite worries about how coronavirus crisis will impact China’s economy and regional tourism.
He said inflation in the Philippines will probably average 2.9% in 2020 and 2021, and the peso currency remains “very stable.”
“We don’t have a problem hitting 6.5%, despite this coronavirus,” he said from his offices. “We’re very confident” of reaching that growth pace, he said.
The Philippine economy is getting a boost from extra government spending carried over from 2019 and an ambitious infrastructure program that’s helping to spur investment. At the same time inflation is accelerating, with data Wednesday putting it at 2.9% in January.