MANILA, Philippines — The Bangko Sentral ng Pilipinas is may cut rates provided painfully-high inflation eases in the next five months.

“If we have four more of that, five more, we can even talk about cuts,” BSP Governor Felipe Medalla said at an economic briefing in the US on Wednesday night (Manila time).

The central bank governor was referring to month-on-month inflation, which hit 0.3% in February then slowed further to 0% in the previous month.

As it is, headline inflation hit 7.6% year-on-year in March. This marked a slowdown of sorts in recent months, as consumer price growth kept accelerating since the middle of 2022. Consumer prices caved under the weight of supply bottlenecks, fanned by the domestic economy’s reopening, and a weak peso in past month.

The BSP responded by hiking interest rates, starting in May last year, to combat rising inflation. So far, the central bank has injected 425 basis points, sending the benchmark rate to 6.25%.

Central banks everywhere employ rate hikes to discourage consumers and firms from taking out credit from banks and financial institutions. These rate hikes typically take six to 18 months before it seeps into the domestic economy.

That said, the powerful Monetary Board is expected to convene on May 18 to decide the next rate action. To this end, Medalla said a tightening pause is possible.

The BSP governor admitted that if month-on-month inflation shows a similar downtrend, then there’s “a very good reason to pause.”