MANILA -- Bangko Sentral ng Pilipinas Gov. Benjamin Diokno said Tuesday he was "convinced" monetary authorities have room to ease policy, as he keeps close watch on El Niño.
Diokno cited cooling inflation, expectations of slower inflation and recent statements from the Federal Reserve that it was slowing the pace of its interest rate increases.
"If there's a need" to ease policy, Diokno said it could be a reduction in the reserve requirement ratio for banks of about "1 percentage point every quarter for the next 4 quarters." The current ratio is "very high," he said.
Diokno said he would monitor the scale of El Niño and its effect on the economy. A water shortage in the capital has been blamed in part on the drought.
The Monetary Board under Diokno will meet for the first time on March 21. His predecessor, the late BSP Gov. Nestor Espenilla, raised the benchmark borrowing rate by a cumulative 175 basis points in 5 successive policy meetings last year as inflation hovered near 10-year highs.
"I'm convinced there's room for monetary easing. Coming from what the former central bank governor did last year when we were facing elevated prices," Diokno told ANC in his first television interview since taking office last week.
"We will look at the need of the economy, we have a fast growing economy. If there's a need for monetary easing, I think we'll consider," he said. "Everybody should be pro-growth, we need growth in this economy."
Diokno said inflation would be "right smack at 3 percent" this year, at the midpoint of the BSP's 2 to 4 percent goal. Inflation returned to target in February at 3.8 percent.
Last week, Diokno said the BSP must ensure that economic growth is "steady and strong" and that monetary and fiscal policies are balanced.
Decisions by the Monetary Board will be based on data and evidence, Diokno said.
"All of us are 7 Yodas," likening the board to the beloved Star Wars character whose size and age belie his wisdom and power.
"We're very old, average age 70, very diverse backgrounds," said Diokno, among 3 economists in the body, which also includes two ex-bankers and the secretary of finance.
Gross domestic product grew 6.2 percent in 2018, still among the fastest in Asia, despite price spikes and higher borrowing costs that crimped consumer spending.