Manila: The slow economic growth allows the Bangko Sentral ng Pilipinas (BSP) to be less aggressive in terms of monetary policy tightening, BSP Governor Eli Remolona Jr. said Friday. 'Of course, the weaker growth that we're seeing means we can be less aggressive in trying to tame inflation,' Remolona said at the Economic Journalists Association of the Philippines (EJAP) Economic Forum at the Bangko Sentral ng Pilipinas (BSP) office in Manila.

According to Philippines News Agency, the country's economic growth slowed to 2.3 percent in the second quarter of 2026 from 2.8 percent in the first quarter. The growth last quarter was 'disappointing and somewhat surprising,' Remolona said, adding that while the economy is still growing, the growth is below potential.

'Our potential growth, I think, may be 5 to 6 percent, which means for the BSP, we have what's called an output gap. We have a difference between our potential and our actual growth, and that matters for monetary policy,' he said. The BSP's Monetary Board hiked policy rates by another 25 basis points during its last meeting in June, citing persistent inflationary pressures amid elevated global oil prices. The Monetary Board is scheduled to meet on Aug. 27.

The slower economic growth, however, could reduce the BSP's need to further hike policy rates. Inflation has so far eased to 6.2 percent in July from 6.4 percent in June. Remolona noted that while inflation remains above the government's target, inflation expectations continue to be well-anchored. He said that according to 24 analysts surveyed by the BSP, inflation will settle at about 5.4 percent in the next 12 months, 4 percent in the 24 months ahead, and further ease to 3 percent after three years.

'This is reassuring because even as we see global supply shocks cause prices to rise very sharply, they still expect that prices will come down,' he said. Remolona, however, said that the BSP still needs to see a more convincing inflation downward trend. 'So, with the growth numbers, and with the inflation numbers, I think we need a more convincing downward trend for inflation before we can relax,' he said. 'But in the face of an unpredictable opponent, oil prices, for example, we need to keep our eye on the ball.'