Inflation likely lower

monetary authorities.

The BSP’s benchmark rate currently stands at 6.5 percent following 450 basis points of rate hikes beginning May 2022 in response to surging inflation.

The central bank’s policymaking Monetary Board has held fire for the last two meetings and is expected to continue doing so for the first half of the year.

BSP Governor Eli Remolona Jr. has said that rate reductions can be expected this year, but hikes cannot be ruled out given continued inflationary risks, particularly the impact of the El Niño weather pattern on food prices.

Remolona also said that if economic growth remained robust, monetary authorities would have more room to hike interest rates should inflation rise anew.

The Philippine Statistics Authority (PSA) on Wednesday reported that the economy grew by 5.6 percent last year, markedly slowing from 2022’s 7.6 percent and missing the government’s 6.0- to 7.0-percent target.

In a statement issued following the release of the growth report, Socioeconomic Planning Secretary Arsenio Balisacan said that the impact of higher interest rates was a factor in the slowdown.

“Its (the rate hikes’) longerterm effects become noticeable a few quarters down the line. So, the slowdown we are currently observing may be the result of past increases in interest rates, particularly those implemented early last year and in 2022,” Balisacan said.

Remolona expects inflation to fall within target in the first quarter this year but again top 4.0 percent in the next three months before easing for the rest of 2024.