Department of Finance Secretary Ralph Recto (Photo courtesy of DOF)
MANILA – Finance Secretary Ralph Recto said he does not expect interest rates to further increase as inflation is already easing.
"I don’t expect a future rate hike because inflation is going down and it seems that it’s going down globally also," Finance Secretary Ralph Recto said on the sidelines of the Bureau of Internal Revenue's National Tax Campaign kick-off on Thursday.
Recto is the government representative to the Bangko Sentral ng Pilipinas' Monetary Board (MB).
Headline inflation settled at 2.8 percent in January, the lowest recorded since October 2020.
The BSP's MB has so far kept policy rates unchanged for two consecutive meetings. It is scheduled to hold its rate-setting meeting on Feb. 15.
"I think our policy rates today are high enough," Recto said.
The BSP has so far hiked policy rates by a total of 450 basis points since May 2022 to tame the elevated inflation. This brought the benchmark policy rate to 6.5 percent.
"Inflation is on its way down. Assuming it continues to go down and within the range, then realistically, ang susunod dyan ay (what follows is) the lowering of the interest rates," he said.
Recto noted, however, that in terms of policy easing, the BSP may take its cue from the United States Federal Reserve.
"There’s a possibility na bumaba 'yan (it would go down). It all depends on what the US Fed does, as well. And then we look at our own data too," he said.
"But I think the key is what happens with the Fed – are they (going to) start reducing rates? If they do, then possibly we can start reducing rates. Palagay ko, kailangan mauna ang Fed (I think the Fed needs to cut first) then we take a look at our own data. We live in a global world, we’re affected with what the Fed does, as well," Recto added. (PNA)
