Finance Secretary Benjamin E. Diokno said it is highly probable that the central bank will maintain its current monetary stance for an extended period due to the expected decrease in inflation in the coming months. During his weekly "Chat with SBED" last Friday, June 23, Diokno said that while easing inflation would lessen the likelihood of further rate hikes, the economy does not currently require any interest rate cuts to stimulate growth. “I think we will continue to maintain… it’s going to be a long pause,” said Diokno, who is also a member of the Monetary Board and former governor of the Bangko Sentral ng Pilipinas (BSP). Diokno’s pronouncement is aligned with outgoing BSP Governor Felipe M. Medalla’s statement that the central bank’s cumulative rate hikes since last year are enough to temper demand that was stoking inflation. Given this, Medalla said the BSP would likely maintain a stable interest rate for the remainder of this year to ensure that inflation is sufficiently under control before contemplating monetary easing in 2024. “I don't see any cut until there’s strong evidence of a decline, and we are expecting the inflation rate to be within the range by the fourth quarter of this year, meaning two to four percent,” Diokno said. He also did not rule out the possibility that inflation may stabilize at four percent by September, or perhaps in the third quarter “if we’re lucky.” "So by that time, that will be the time to consider the cut because globally there’s still persistent inflation. We’re just trying to be conservative,” Diokno said. In response to the declining inflation trend, the BSP decided to maintain its current interest rates for a second consecutive month last June 22, indicating a pause in its tightening cycle. The central bank's overnight reverse repurchase facility remains at 6.25 percent, while the overnight deposit and lending facility interest rates remain at 5.75 and 6.75 percent, respectively. Medalla explained that the return of inflation within the target range by the end of the year, coupled with sustained economic growth, provided the BSP with the opportunity to keep the current rates unchanged and evaluate the impact of its prior monetary measures. Despite a marginal decrease in May to a 12-month low of 6.1 percent from 6.6 percent in April, inflation has remained high at an average of 7.5 percent for the first five months of the year, exceeding the target range of two to four percent. Furthermore, core inflation, which excludes the volatile food and energy sectors, remained elevated at 7.8 percent from January to May this year. With the projected decrease in month-ahead inflation for June, the BSP adjusted its inflation forecast for 2023, lowering it to 5.4 percent from 5.5 percent. However, the inflation forecast for 2024 has been increased to 2.9 percent from 2.8 percent, due to the gradual reopening of the economy, as well as the effects of the US Federal Reserve's more hawkish stance. The BSP also predicts that inflation will average 3.2 percent in 2025.