The Monetary Board is considering two more cuts for its policy rate for the rest of the year, Bangko Sentral ng Pilipinas (BSP) Governor Eli Remolona Jr. said.

Remolona, who is also the chairman of the BSP Monetary Board, said on Friday that the two cuts will not necessarily be delivered consecutively in the four meetings left for the policy rate in June, August, October and December.

He said the MB is considering a 25-basis-point reduction for each cut. This would bring the policy rate down to 5 percent by year-end from the current 5.5 percent.

“There’s room for a few baby steps,” Remolona said Friday in a meeting with the media at the BSP Main Office in Malate, Manila City.

Inflation to further improve

The Monetary Board chairman said the slowing local inflation supports further policy rate reduction, which can translate into sustained economic growth in the country.

“We still expect low inflation in the coming months,” Remolona said.

According to the Philippine Statistics Authority, inflation in April stood at 1.4 percent, the lowest in more than five years, due to cheaper food, non-alcoholic drinks and transport.

Remolona said the board members remain cautious in adjusting the policy rate as deep cuts could boost consumption of goods and services, leading to accelerated inflation.

In January 2023, overall inflation climbed to 8.7 percent due to the so-called revenge spending after the pandemic. This reflected an acceleration of 7.4 percent in core inflation, which includes all goods and services except volatile items like food and energy.