*
Philippine c.bank gov, finmin see room for pause
*
Difficult to lower rates when U.S. is not cutting - c.bank
gov
*
Monetary authorities to meet on May 18 to set policy rates
(Recasts, adds comments from c.bank gov on pause in rate hikes)
By Neil Jerome Morales and Enrico Dela Cruz
CEBU, Philippines, May 15 (Reuters) -
The Philippine central bank could pause interest rate hikes at its monetary policy meeting this week, its governor said on Monday, after inflation in April eased for a third straight month.
"If you're sure this is a permanent trend, clearly we must pause because there will be no need for another one," Bangko Sentral ng Pilipinas (BSP) Governor Felipe Medalla told reporters on the sidelines of a financial stability conference.
Philippine annual inflation eased for a third straight month in April to 6.6%, and the economic planning ministry said last week it appeared to have peaked and was on track to ease towards the government's 2%-4% target by the fourth quarter.
The seven-person policy-making Monetary Board, which Medalla heads, will meet on May 18 to set the central bank's benchmark rate which currently stands at 6.25% following a total of 425 basis points hikes since May last year.
One of its members, Finance Secretary Benjamin Diokno said
on Friday he would vote to keep the benchmark rate steady given
that inflation was declining. "I'm for a pause, that's my
opinion," he said.
Despite cooling inflation, there was no solid consensus for
a pause, with some economists pencilling in a hike before the
central bank takes a break from its 10-month policy tightening
cycle.
Officials have said the central bank's aggressive
tightening could dampen domestic demand, which slowed for a
fourth straight month in the first quarter and contributed to
the economy's slower annual expansion in the first quarter of
the year.
The International Monetary Fund said on Friday that with
risks to inflation remaining on the upside, "a continued
tightening bias may be appropriate until inflation falls
decisively within the 2-4% target range".
Medalla, who is expecting next year to be a "year of good
growth and good inflation" ruled out a rate cut any time soon to
manage interest rate differentials with the United States.
"If the U.S. is not cutting, it's hard for us to be
cutting lower," Medalla said.
(Reporting by Enrico Dela Cruz and Neil Jerome Morales; Editing
by Jane Merriman, Kanupriya Kapoor)
