Recto: Bangko Sentral done with hiking rates

MONETARY authorities are unlikely to further tighten policy as key interest rates are high enough, Finance Secretary Ralph Recto said on Thursday.

«I don't expect a future rate hike because inflation is going down, and it seems that it's going down globally also,» Recto told reporters at the sidelines of the kick-off of this year's National Tax Campaign.

While inflation could still go up, he added, «I think our policy rates today are high enough.»

«There's a possibility that it (interest rates) might decrease,» he added. "[I]t all depends on what the US Federal Reserve (Fed) does as well."

The Bangko Sentral ng Pilipinas' (BSP) benchmark rate currently stands at 6.5 percent, the highest since 2007, after 450 basis points of rate hikes beginning May 2022 as inflation started surging.

Consumer price growth, which hit a 14-year high of 8.7 percent in January last year, finally returned to the BSP's 2.0- to 4.0-percent target in December at 3.9 percent.

It fell further to 2.8 percent last month, prompting talk as to when the central bank's policymaking Monetary Board, which left interest rates untouched during its last two meetings, would begin relaxing policy.

BSP Governor Eli Remolona Jr. has said that rate cuts are likely this year but not during the first semester, citing continued upside risks to inflation, particularly the El Niño weather pattern's impact on food prices.

Inflation will likely trend lower during the first three months of 2024, the central bank said, but then pick up in the second quarter.

«Inflation is on its way down,» Recto said. "[A]ssuming it continues to go down and within the [target] range then realistically, the next step would be a reduction in interest rates."

«But it's possible it may still go up a bit… I think the key is what happens with the Fed, are they gonna start reducing rates. If they do, then possibly we can start reducing rates,» he added.

The US central bank was initially expected to start easing in March after having indicated 75 basis points of rate cuts this year.

Fed officials, however, last week all but ruled out a March rate cut, saying that US inflation was still not fully under control. Analysts now expect one in May at