A regional economic research group sees no urgency for the Bangko Sentral ng Pilipinas to cut rates this year for as long as the Philippine economy continues to do well.

In a briefing on Thursday, ASEAN+3 Macroeconomic Research Office Chief Economist Hoe Ee Khor said the central bank should remain tightening the interest rates until the country's inflation has dropped within the 2 to 4 percent target average inflation range.

Latest data from the Philippine Statistics Authority showed that the country's inflation rate reached 3.9 percent in December 2023, down from 4.1 percent in November.

The result brought the 2023 average inflation rate to 6.0 percent, still way outside the central bank's 2 percent to 4 percent target.

However, according to AMRO's Chief Economist, the Philippine economy is negatively impacted by rising interest rates since it costs more for people and businesses to borrow money, which usually slows the economy's growth.

"Part of the reason growth was somewhat weaker in the fourth quarter (of 2023) could also be that the interest rates are relatively high. But we need to keep rates tight to ensure inflation goes down," Khor said.

While higher interest rates may make borrowing more costly and impede economic growth in general, AMRO expects inflation to ease further this year to within the government's 2 to 4 percent target range.

"So as you can see, the average for the whole year of last year was at 6 percent and we expect (it) to come down to 3.6 percent this year which is within the inflation target band," Khor said.

In addition, AMRO maintained its 2024 growth estimate of 6.3 percent for this year—a figure within the 6.5 to 7.5 percent goal set by the Philippine economic managers.

AMRO also kept its 4.5 percent growth estimate for the ASEAN+3 region until 2024.

Despite concerns about the global outlook, AMRO believes that the country's economic growth will be driven by robust domestic demand, moderate inflation, and ongoing trade recovery.