Philippines believes no need to increase its own interest rates despite economic boom
Manila will not necessarily match further increases in rates by the US Federal Reserve
Philippine central bank governor Nestor Espenilla said contained inflation means there is no need to increase interest rates in the near term.
“Right now there is no need to move policy rates looking at the inflation outlook,” Espenilla said in Washington where he was attending the annual International Monetary Fund meetings. “It might be too much of an anticipation to say we will raise interest rates at the next review.”
An economic boom accompanied by surging credit growth has fuelled speculation that the Bangko Sentral ng Pilipinas may need to tighten monetary policy. That would be a divergence from other central banks in Southeast Asia, like Indonesia and Vietnam, that have been easing this year.
The Philippines kept its benchmark interest rate unchanged at a record low of 3 per cent last month. The central bank’s next scheduled meeting to decide policy is on November 9.
The Philippine economy is headed for a sixth year of growth exceeding 6 per cent, among the world’s fastest. That has not yet translated into an inflation problem with the central bank maintaining its forecast for this year and next year at 3.2 per cent. The bank’s goal is to keep inflation within a range of 2 per cent to 4 per cent until 2020.
“If you look at it purely from that perspective that is not really a big driver for us to move policy rates,” Espenilla said. “Nonetheless we review this on a six-week cycle.”
