Bilyonaryo - Business

Medalla waiting on Fed cut before BSP slashes rates

May 19, 2023

Bilyonaryo.com

Bangko Sentral ng Pilipinas Governor Felipe Medalla is waiting for cues from the US Federal Reserve before undoing the aggressive rate hikes over the recent months.

“If the US cuts then we have room to cut, I think,” the central bank chief told Bloomberg on Friday (May 19).

Medalla said market players believe that the rate differential between the US and the Philippines are currently too narrow, meaning the BSP risks making local rates uncompetitive if it cuts ahead of the Fed.

“Right now, the economy’s still strong and in fact, we are forecasting that the economy will grow by 6%, a little bit more, this year. That’s the other reason the pressure to cut is not that high,” he added.

The BSP kept the benchmark rate at 6.25% during its May 18 meeting, with Medalla noting that the next two to three rate-setting meetings will likely see a status quo on rates.

“We still want to make sure that we will be able to deliver headline inflation that is below 4% as early as possible, which in the current scenario is by the fourth quarter of this year,” he added.

Related News Tags: Bangko Sentral ng Pilipinas, BSP, Felipe Medalla, US, US Federal Reserve

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