Bangko Sentral ng Pilipinas (BSP) Governor Eli Remolona Jr. shrugs off a proposal to cut interest rates by 150 basis points (BPS) in two years, describing it as "too aggressive" given the pace of the country's economic trajectory.
Remolona said, "Give" the present trajectory (of growth), it is too aggressive. In taming inflation, we don't 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."
The BSP governor said that an "aggressive easing of monetary policy rates could result in a hard landing or a rapid decline in economic growth.
Last week, Finance Secretary Ralph Recto suggested easing the BSP's 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.
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