By Fabiana Negrin Ochoa
The Philippine central bank left its benchmark rates unchanged, saying that inflation risks have diminished but still merit caution.
The Bangko Sentral ng Pilipinas said Thursday that it will keep its overnight reverse repurchase rate steady at 6.50%, in line with the unanimous expectation of 10 economists polled by The Wall Street Journal. It held its benchmark lending rate at 7.00%.
Though its latest survey of external forecasters showed inflation expectations are more firmly anchored within the 2%-4% target range, the bank "remains ready" to adjust policy settings to guard against inflation and maintain economic stability, BSP Governor Eli Remolona said at a press conference.
He flagged rising prices of rice as a factor to watch, with risks to the inflation outlook also coming from higher transport charges, electricity rates, oil and the impact of El Niño on food prices.
Domestic economic activity is expected to "remain intact" over the medium term, the central bank added.
Thursday's decision comes after data showed some easing in inflation. The country's consumer-price index in January rose 2.8% compared with the same period a year earlier, slowing from December's 3.9% increase.
Some economists are pencilling in rate cuts in the latter part of the year.
Barclays economists said in a recent note that they expect the central bank to start cutting rates in the third quarter, when policymakers are more confident about a sustained downtrend in inflation.
Goldman Sachs strategists said they expect inflation to continue easing in the first quarter but pick up again in the second.
The BSP is expected to start cutting policy rates in the fourth quarter this year, although a weaker-than-expected inflation result in the second quarter could lead the BSP to cur rates earlier than expected, Rina Jio and Jonathan Sequeira said in a recent note.
Write to Fabiana Negrin Ochoa at fabiana.negrinochoa@wsj.com
(END) Dow Jones Newswires
02-15-24 0250ET
