MANILA -- The Bangko Sentral ng Pilipinas (BSP) kept interest rates steady in its June meeting, as Governor Eli Remolona said it is now “more likely” to cut rates by August.

Remolona on Thursday said the Monetary Board again decided to keep the bench target reverse repurchase rate at 6.5 percent.

The central bank chief said the balance of risks to the inflation has shifted to the downside for 2024 and 2025, largely because of lower import tariffs on rice under Executive Order 62.

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Senior Assistant Governor of the Monetary Policy Sub-sector Iluminada Sicat said they see rice prices easing by 14.8 percent over a 12-month period because of lower tariffs.

It was in May that BSP officials first said that they may start easing rates in August.

“Actually, somewhat more likely than before,” Remolona said when asked if the BSP may still ease rates by August.

When pressed if the central bank plans to cut rates ahead of the United States Federal Reserve, Remolona said, “The Federal Reserve will cut but we’re on track to cut in the third quarter.”

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Remolona said the BSP may reduce key rates by 25 basis points each time.

“So if we follow the course where we think we are, that would mean 25 basis points in the third quarter, and then 25 in the fourth quarter,” he explained.

He noted, however, that higher transport costs, electricity rates, and prices of food other than rice—like pork, corn, and fish—may still drive keep inflation up.

The BSP has been keeping monetary policy tight in a bid to curb inflation.

After easing to 2.8 percent at the start of the year, inflation quickened to 3.4 percent in February, 3.7 percent in March, 3.8 percent in April and 3.9 percent in May amid high food, fuel, and electricity costs.

The BSP lowered its baseline inflation forecast for 2024 to 3.3 percent from an earlier 3.5 percent.

For 2025, the baseline forecast is at 3.1 percent, also lower than the 3.3 percent that the central bank forecast in May.