MANILA, May 15 (Reuters) - The Philippine central bank
has no reason to raise interest rates further as domestic
inflation is easing, the country's finance minister said ahead
of a May 18 monetary policy meeting.
Finance Secretary Benjamin Diokno reiterated his stance
against a rate hike when he spoke to reporters. But he said he
was just expressing his opinion and was only one of the seven
monetary board members who will each vote during Thursday's
decision-making.
"I'm for a pause, that's my opinion. Inflation is going
down, huge (foreign exchange) reserves, the current account
deficit has expanded but it's financially manageable and that's
because of the improved economy, infrastructure spending," he
said. "So over all, there's no reason why we should increase the
rates."
The Bangko Sentral ng Pilipinas (BSP) has raised rates by a
total of 425 basis points since May last year to fight
inflation, the full impact of which Diokno said had yet to be
absorbed by the economy considering that monetary policy often
works with a long lag.
Philippine annual inflation eased for a third straight month
in April to 6.6%.
BSP Governor Felipe Medalla himself has said the
month-on-month inflation trends in particular "present an even
stronger argument" for keeping rates unchanged at the May 18
policy meeting.
Some economists believe the inflation downtrend and cooling
economic growth have built the case for the BSP to pause in its
tightening cycle.
However, the International Monetary Fund said on Friday that
with risks to inflation remaining on the upside, "a continued
tightening bias maybe appropriate until inflation falls
decisively within the 2-4% target range".
(Reporting by Enrico Dela Cruz. Editing by Jane Merriman)
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