Bangko Sentral ng Pilipinas Governor Eli Remolona Jr. (File photo)
MANILA – Bangko Sentral ng Pilipinas (BSP) Governor Eli Remolona Jr. said on Tuesday easing the monetary policy by 150 basis points (bps) in two years would be “too aggressive” based on the current pace of the country’s economic growth.
“Given the present trajectory (of growth), it is too aggressive,” Remolona told reporters on the sidelines of an event in Mandaluyong.
He said one of the risks of an aggressive easing of policy rates is a hard landing, or a rapid decline in economic growth.
“In taming inflation, we don’t want unnecessary loss of output… although sometimes, we cannot avoid the loss of output… But if there will be big losses, then we have to react to that,” he added.
Last week, Finance Secretary Ralph Recto said the central bank could ease its monetary policy by 150 bps in the next two years.
The central bank chief said the Monetary Board may decide to cut key policy rates ahead of the United States Federal Reserve System if the US inflation remains headstrong.
“Pwede mag-cut ang Fed sa July. Merong analysis na July. Pwede mauna sila, pwede mauna tayo… Depende sila, kung matigas ulo ng inflation nila baka hindi sila mag-cut (The Fed could cut rates in July. There is an analysis that it could be July. They could cut rates first or we can do it ahead of them. It depends, if their inflation remains headstrong, maybe they would not cut rates yet),” Remolona said.
From May 2022 to October 2023, the Monetary Board has hiked policy rates by 450 bps. (PNA)
