By means of Luisa Maria Jacinta C. Jocson, Reporter
INFLATION PRESSURE This could prompt the Philippine central bank to pause its easing cycle, but a slowdown in growth could leave room for another rate cut, the governor said on Wednesday.
“Inflationary pressures may cause us to pause for a while, but weak growth may cause us to cut back,” Governor Eli M. Remolona, Jr. told reporters. of the Bangko Sentral ng Pilipinas (BSP) told reporters on the sidelines of an event on Wednesday.
Depending on the data, he said the Monetary Board could make cuts or pause at its Dec. 19 meeting.
This year, the BSP implemented a total of 50 basis points (bps) of rate cuts in 25 bp increments at its meetings in August and October.
“Based on our measurements, there is still pressure on inflation, and the economy is also a bit weak as shown by the third quarter data,” he said in mixed English and Filipino.
Philippine gross domestic product (GDP) fell to 5.2% in the July-September period, down from 6.4% in the second quarter and 6% a year ago.
This was also the weakest growth since the 4.3% growth in the second quarter of last year.
In the first nine months, GDP grew by 5.8%. The economy would need to grow by at least 6.5% in the fourth quarter to meet the lower end of the government’s target of 6-7%.
Mr Remolona said inflation in November is likely to remain within the target range of 2-4%, based on the BSP’s latest projections.
Overall inflation rose to 2.3% in October, bringing the ten-month average to 3.3%.
According to the BSP’s baseline forecasts, inflation will reach 3.1% this year, 3.2% in 2025 and 3.4% in 2026.
The central bank also said earlier that the balance of risks to the inflation outlook for 2025 and 2026 has shifted upwards, but is likely to remain within target.
BSP Assistant Governor Zeno R. Abenoja said November inflation may reflect typhoon damage in October, but the impact of the multiple storms that hit the country in November is likely to be reflected in December inflation data.
“Based on the Department of Agriculture (DA), they estimated that about 70% of the harvest was done when the typhoons started coming in, the last four typhoons,” he said.
“Hopefully the impact will be limited, but it is the next cycle that may be affected,” he added.
The latest data from the DA shows that combined agricultural damage from tropical cyclones Kristine and Leon, which made landfall in the country in late October, amounted to $9.81 billion.
Meanwhile, the BSP chief said the peso’s performance is not a factor the central bank takes into account in its monetary policy decisions.
‘They are usually different: the exchange rate and the policy rate. We do not use the policy rate to monitor the exchange rate. That’s another matter,” Mr Remolona said.
The peso recently traded around P58-per-dollar, teetering closer to the P59 level.
Mr. Remolona said earlier that he is not concerned about the peso’s weakness, although the central bank intervened with “small amounts” after the peso’s depreciation during the announcement of the election of Donald J. Trump as president of the USA