Inflation slowed in February and has stayed within the central bank's goal
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Governor Eli Remolona
Governor Eli Remolona
Bloomberg
The Philippine central bank has been intervening less in the currency market recently, and it appears on track to resume rate cuts in April, Governor Eli Remolona said Tuesday.
"We are on an easing cycle. There is a good chance we will cut by 25 basis points," the Bangko Sentral ng Pilipinas chief said in an interview with Bloomberg Television's David Ingles on the sidelines of the HSBC Global Investment Summit in Hong Kong.
Cumulative rate cuts could reach as much as 75 basis points for the year depending on data, said Remolona, flagging "somewhat more upside risk than downside risk" for inflation in 2025 and 2026. The Philippines last lowered borrowing costs in December and unexpectedly paused its easing in February.
Inflation slowed in February and has stayed within the central bank's 2%-4% goal for seven consecutive months. The Philippine peso has gained nearly 1% so far this month against the US dollar, the second best-performing currency in Asia after India's rupee, reducing pressure on authorities to intervene in the market and adding room for a rate cut.
"We've been less active in the last few months," Remolona said on the central bank's activity in the foreign exchange markets.
A 200-basis-point cut in big banks' reserve requirement ratio is set to take effect on Friday. The move, announced by the central bank last month, will lower the RRR to 5% and is expected to unleash billions of dollars into the financial system to help spur the economy.
"For us, reserve requirement is a distortionary measure, so we'd like to reduce it to as low as zero, but we have to manage the liquidity implications of it," Remolona said.
The decision to cut the RRR came even as the BSP kept the benchmark interest rate unchanged in February due to heightened global uncertainties.
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