MANILA -- The Bangko Sentral ng Pilipinas should not "rush" to ease policy at its meeting on Thursday, while it waits for more signs that inflation has settled firmly within its goal, an economist said Wednesday.
The BSP will likely send a "more dovish" signal during its meeting on Thursday, as it signals the timing of cuts in the benchmark interest rate and the reserve requirement ratio or RRR for banks, said Nomura chief ASEAN economist Euben Paracuelles.
The RRR cut is "more urgent" and could come before the reduction in the overnight borrowing rate, Paracuelles told ANC's Market Edge.
"There's no need to rush into policy easing this week," Paracuelles said. "It's quite clear inflation is moderating but the BSP would want to see inflation more well-entrenched."
The consumer price index rose 3 percent in April, slowing for the sixth straight month and settling within the BSP's 2 to 4 percent goal for the third straight month.
The benchmark rate was raised by 175 basis points in 2018 to contain inflation that hovered near 10-year highs. The RRR is currently at 18 percent and BSP Gov. Benjamin Diokno said it would be brought down to "single-digit" by the end of his term in 2023.
Paracuelles said gross domestic product growth in the first quarter was unlikely to fall below 6 percent. Official GDP data for the January to March period is also due on Thursday, before the Monetary Board meeting.
Services and manufacturing are "holding up pretty strongly" even as the delay in the passage of the 2019 budget slowed non-interest fiscal spending, he said.
"It's not a single engine economy. It's quite diversified in terms of whats driving it. I think it should still be above 6 percent in Q1," he said.