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Peso Edges Higher As Medalla Says It's Too Early To Talk About Rate-Hike Pause

BSP

Bangko Sentral ng Pilipinas Governor Felipe Medalla stuck with his hawkish stance in the latest round of comments, noting that it's too early to discuss pausing the rate-hike cycle or cutting interest rates in the near term.

  • Medalla told reporters that the probability that the BSP will stand pat in its next two meetings is low." This comes after he told reporters on Tuesday that the next move will likely be a 25bp or 50bp rate hike, which would be an "additional insurance" to contain inflation.
  • His hawkish remarks stood in contrast with earlier comments from Benjamin Diokno, the current Finance Secretary and Medalla's predecessor in the BSP. Diokno noted that the tightening cycle might be drawing to an end, adding that the peak interest rate is likely in sight.
  • The Philippine central bank has been at the forefront of the wave of monetary tightening, raising its policy rate seven times by a cumulative 250bp and above pre-pandemic levels, which included unorthodox off-cycle and preannounced moves.
  • The Philippine peso edged higher on Medalla's comments, with spot USD/PHP last seen -0.08 at PHP54.80 after printing new seven-month lows earlier in the session. USD/PHP 1-month NDF extended its pullback from earlier intraday highs and last deals +0.05 at PHP54.83.

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