MANILA: The Philippines central bank was still hawkish with monetary policy and saw further room for an interest rate hike, with a cut unlikely anytime soon, its governor said on Friday.

The Bangko Sentral ng Pilipinas (BSP) has raised its benchmark rate by a total of 450 basis points since May 2022 to rein in inflation, including an off-cycle hike in October last year.

Rates, however, have been kept steady in its final two meetings in 2023.

Eli Remolona, speaking at a reception event with private bankers, said a rate cut in the first semester would be too soon. The rate-setting monetary board will meet on Feb. 15 to review interest rates.

Philippine central bank: supply shocks could keep inflation above target

The economy had likely performed better in the final quarter of last year compared to the third quarter, he said, a trend that could allow the BSP more room to raise rates.

“If the growth is strong, that gives us a bit more room to hike,” Remolona told reporters.

Headline inflation last month returned to target to 3.9%, but average inflation for 2023 stood at 6.0%, way above the central bank’s 2% to 4% target.

Remolona said January inflation was likely to be a low number because of base effects.

The BSP’s latest “risk-adjusted” inflation forecast indicates inflation could settle at 4.2% this year, slightly above its target range