Marcos Picks MB’s Remolona As BSP Governor

President Ferdinand R. Marcos, Jr. has chosen Eli M. Remolona to be the next central bank governor for a six-year term, the presidential office said.

Photo Insert: Remolona, who sits on the seven-member policy-making Monetary Board, will replace Felipe M. Medalla, starting in July.

Remolona, who sits on the seven-member policy-making Monetary Board, will replace Felipe M. Medalla, starting in July.

“With his extensive experience and remarkable achievements in central banking, economic policy, international finance, and financial markets, Mr. Remolona brings a wealth of expertise to his new role,” the presidential office said in a statement.

Remolona worked for a combined 33 years at the Federal Reserve Bank of New York and the Bank for International Settlements. He joined the Monetary Board in August, taking over the seat vacated by Mr. Medalla, who became the central bank governor.

In a related development, the BSP kept benchmark interest rates unchanged for a second straight meeting on June 22, Thursday, and signaled policy easing is unlikely in the near term.

At its fourth policy meeting for the year, the Monetary Board maintained its overnight reverse repurchase rate at 6.25%, as expected by 15 economists polled recently. Interest rates on the overnight deposit and lending facilities were also left unchanged at 5.75% and 6.75%, respectively.

“The Monetary Board deems it appropriate to maintain current monetary policy settings to allow the BSP to further assess how inflation and domestic demand have responded to tighter monetary conditions,” Medalla said in a press briefing. The central bank raised borrowing costs by 425 basis points (bps) from May 2022 to March 2023 to tame inflation.

Asked if the BSP would cut rates this year, Medalla said he would like to wait to verify forecasts that inflation would continue easing. “I would like to see two months of below 4% inflation before considering cutting,” he said.

The BSP also trimmed its average inflation forecast for 2023 to 5.4% from the 5.5% it gave in May. This is still above the 2-4% target range.

The main reasons for the adjustments are the lower-than-expected inflation outturn in May and although this is still preliminary, we are looking at a lower month-ahead forecast for June,” BSP Deputy Governor Francisco G. Dakila, Jr. said in the same briefing.

Headline inflation slowed to 6.1% in May from 6.6% in April. April marked the 14th straight month that inflation breached the central bank’s 2-4% target range. For the first five months, inflation averaged 7.5%, still well above the BSP’s revised 5.4% forecast for the year.

But the BSP chief assured the worst supply shocks have already passed, and that inflation will be below 4.0% by October or November this year. He added that core inflation, which excludes volatile prices of food and fuel, will follow suit.

Core inflation slowed to 7.7% last month from 7.9% in April. It averaged 7.8% in the five-month period.

However, Medalla flagged lingering upside risks to the inflation outlook, citing the “potential impact of additional transport fare increases and minimum wage adjustments, persistent supply constraints of key food items, El Niño weather conditions, and possible knock-on effects of higher toll rates on agricultural prices.”

“Going forward, the BSP remains prepared to resume monetary tightening as necessary, in line with its data-dependent approach to ensuring price and financial stability,” he added.

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