THE PHILIPPINE peso鈥檚 current slump is unlikely to prompt the central bank to raise its key interest rate from a 17-year high at this time, according to Finance Secretary Ralph G. Recto.
The Bangko Sentral ng Pilipinas鈥 (BSP) next policy move 鈥渨ill be dependent on inflation data,鈥 Mr. Recto said in a mobile-phone reply to Bloomberg News. Asked if a rate hike is being considered as the local currency slipped to as low as P57.96 against the dollar on Thursday, Recto said: 鈥淔or now, I don鈥檛 think so.鈥
The peso fell to a fresh 17-month low against the dollar, staying past the closely watched P57-level for the second week as central banks grapple with the outlook of higher-for-longer US rates and tensions in the Middle East.
Mr. Recto, one of seven members of the BSP鈥檚 monetary panel, is signaling patience, even after a resurgent dollar prompted its neighbor Indonesia on Wednesday to unexpectedly raise interest rate to defend its currency.
Aside from the exchange rate, inflation and economic growth will also weigh on the BSP鈥檚 next policy decision on May 16. Price gains accelerated for a second month in March, and BSP Governor Eli M. Remolona, Jr. sees rising risk that inflation may breach the central bank鈥檚 2%-to-4% goal for a third straight year.
The BSP chief said last week that the central bank is still on course to cut rates later this year or in early-2025 despite the peso鈥檚 weakness.
National Economic and Development Authority (NEDA) Secretary Arsenio M. Balisacan on Thursday, meanwhile, said tight monetary policy could crimp growth, as he underscored the need for non-monetary measures to tame inflation.
鈥淓ven though interest rate hikes 鈥 a monetary policy tool utilized by the BSP 鈥 can decelerate inflation by discouraging consumption and investment activities, it may also dampen demand and reduce economic opportunities made available to Filipino workers,鈥 Mr. Balisacan said in a statement that backs a plan to ease importation rule 鈥 Bloomberg
