Philippine central financial institution might pause fee hikes in Q1 if no shocks By Reuters

MANILA (Reuters) – The Philippine central financial institution might pause its rate of interest hikes within the first quarter of subsequent yr if there are “no main shocks”, its governor stated on Tuesday.

The Bangko Sentral ng Pilipinas has raised coverage charges six occasions this yr to five.0% to curb inflation, working close to 14-year highs, and assist the peso which has fallen sharply in opposition to the greenback, due to aggressive U.S. financial tightening.

Governor Felipe Medalla advised reporters his personal “base case state of affairs” is that the Federal Reserve will pause coverage tightening within the first quarter of 2023, easing stress on the BSP to match its coverage actions.

Requested if the BSP will pause subsequent yr, Medalla stated: “Possibly the primary quarter, relying on developments.”

The Fed has raised borrowing prices sooner this yr than at any time for the reason that early Eighties, utilizing jumps of 75-basis-points at every of the final 4 conferences to convey the coverage fee to its present 3.75%-4% vary.

Fed policymakers have signaled they might transfer extra slowly beginning at their assembly subsequent month, at the same time as some together with Fed Chair Jerome Powell have signaled rates of interest might finally must go greater.

BSP’s Medalla stated the central financial institution has room to answer any Fed transfer both “absolutely or partially”, relying on knowledge.

The central financial institution, which meets each six weeks, will meet for the final time this yr on December 15.