The Bangko Sentral ng Pilipinas (BSP) said it might cut its policy rate once inflation declines and stabilizes close to 3 percent in the next few months.

BSP Governor Eli Remolona Jr. on Monday shared this on Monday ahead of today’s announcement of the April inflation by the Philippine Statistics Authority.

In March, inflation rose again to 3.7 percent from 3.4 percent in February and 2.8 percent in January, mainly due to higher food prices.

“The March inflation was still high. We’ll see the latest inflation rate, but one number won’t make a big difference,” Remolona said.

Currently, the BSP Monetary Board imposes a 6.5 percent policy rate to manage inflation by restraining consumer demand for goods and services, especially that rice, meat and fuel prices continued to increase in March.

Sufficiently tight hawkishness

As of Monday, Remolona said the BSP Monetary Board remains hawkish to prevent inflation from surging, and added this hawkishness is “sufficiently tight” to achieve that goal.

If inflation rates meet the BSP’s ideal levels, Remolona said the central bank will likely reduce its policy rate by 25 basis points.

“A bigger reduction suggests the country has fallen into a recession. We don’t see that coming,” he said.

The BSP had said last 30 April that it expects April inflation to range from 3.5 to 4.3 percent due to lingering risks to food and fuel prices.

It added that inflation might return to its inflation target range of two to four percent by the third quarter.