(Bloomberg) -- The Philippines is unlikely to raise interest rates in the first half of this year and will “wait and see” how the pandemic plays out before any adjustment, central bank Governor Benjamin Diokno told the Financial Times.
The Bangko Sentral ng Pilipinas' monetary board supports this view on any change to rates, the newspaper cited Diokno as saying. The Philippines wants breathing room because there is still so much uncertainty surrounding Covid-19, he said in the report.
The central bank can afford to be “patient” with raising interest rates because it has strong foreign reserves and lower inflation, the governor told the newspaper. Inflation is becoming “tamer and tamer,” easing to 3% year-on-year in January from 3.2% in December, the newspaper cited Diokno as saying.
The central bank governor said rate increases by the Federal reserve, which typically lead to outflows of foreign exchange, would be cushioned by the Philippines' large international reserves, which are equivalent to more than 10 months' worth of imports, according to the report.
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