Bangko Sentral ng Pilipinas (BSP) Governor Eli M. Remolona warned against 鈥渟udden reversals鈥 of monetary policy when asked about the possibility of a rate cut in an interview with Nomura Holdings Inc. earlier this month.
鈥淚f there鈥檚 a chance that we might have to raise rates again after we start cutting, we don鈥檛 want to take the risk from these quick reversals,鈥 Mr. Remolona said in a transcript of conversation with Nomura鈥檚 chief Asean economist Euben Paracuelles that the central bank sent on Friday.
It is 鈥減rudent鈥 for BSP to still pause on the policy rate if there are no large inflation shocks and if there are mixed signals from the data, particularly on the economy, according to the transcript.
The nation is not 鈥渙ut of the woods yet鈥 on inflation, and the BSP is watching new supply shocks and El Ni帽o to see if further monetary tightening is needed.
鈥淚f we don鈥檛 tighten when those shocks materialize, then expectations could get out of hand, inflation will feed on itself, and it gets much harder for us,鈥 the BSP chief said, adding that the central bank wants 鈥渢o be comfortable that inflation is staying within鈥 its 2%-to-4% target.
Mr. Remolona鈥檚 comments were made before the government reported Thursday that second-quarter economic growth decelerated to 4.3% from a year ago on above-target inflation, borrowings costs at a 16-year high and government underspending. 鈥 Bloomberg
