MANILA, May 20 (Reuters): The Philippines central bank kept its benchmark interest rate steady at 6.25% this week pausing its 10-month tightening cycle, with inflation on track to ease back towards its 2% to 4% target range for the year.
Only six out of 22 economists in a Reuters poll had predicted a 25 basis point (bps) hike, while the rest had expected the central bank to take a break after raising rates by a total of 425 bps since last May.
"The BSP's latest baseline projections continue to reflect a gradual return of inflation to the target band of 2% to 4% over the policy horizon," Bangko Sentral ng Pilipinas (BSP) Governor Felipe Medalla told a media briefing,
BSP's move to pause its most aggressive rate hiking cycle in years comes after inflation eased in April for the third straight month.
The BSP said inflation should return to target by the fourth quarter of this year but said it stood ready to respond to emerging price threats.
"A prudent pause also allows monetary authorities to further assess how macroeconomic and financial conditions will evolve in view of tighter global financial conditions," the BSP said.
The improving consumer price outlook allowed the central bank to trim its inflation forecast for the year and next to 5.5% and 2.8%, respectively, from 6.0% and 2.9% previously. - Reuters
