His government journey spans four decades across budget, central banking, and finance under multiple presidents. Now he's a full-time monetary board member of the Banko Sentral, steering a higher interest rate regime in a time of elevated inflation and slowing growth.
With us now for more is monetary board member Benjamin. It's good seeing you again, MBM. Ben, welcome to the program.
Yes, thanks for having me.
It's been some time. So what was it like in that June 18 policy meeting where the decision had been a 25 basis point hike? I thought that prior to that meeting the sentiment was a 50 basis point cut, but because of the positive development globally I think the sentiment was to raise by 25 basis points, which was unanimous.
Cut rather, hike. Very high.
But because of the positive development globally, I think the sentiment was to raise by 25 basis points, which was unanimous.
Which is reasonable. Unanimous among the seven monetary board members? Much unanimous, but a great majority.
Were you part of the great majority?
All right. But then the near split between maybe a 25 and 50. I mean, how close was it a call?
Not that was not close at all. The 25 basis point increase was overwhelming, but we were looking at possible increases, but we want it measured and gradual. I thought personally that a 50 basis point hike is too harsh for the economy.
A hike it would because it would cause job losses, slowing down, right?
Sure. 2.8% for the first quarter.
So it could cause more unemployment and slower growth. Did anybody hold out for a pause?
All right. But would you consider yourself a hawk or a dove?
I just look at the numbers. I don't consider myself a hawk or a dove.
Okay. But I do know that you have an expressed view about making sure that people have jobs, that they don't lose jobs in any kind of crisis. I mean, I've seen you in action during the pandemic and that was like a template on which we can possibly, but maybe you can tell us.
You know, in a crisis where we're seeing not only the oil shock but also the ill effects, the after effects on the economy of the flood control corruption scandal. The main objective, the core function of the central bank is inflation targeting, but it also has responsibility with respect to growth and employment. So you have to balance the two.
And do you think that balance is still a ways off because the...
It's not easy, right? It is not because when you listen to the governor in his latest media briefing on the day that you decided to increase by 25 bips, it seems that it's going to be a higher for longer interest rate scenario with the kind of inflation projections not only for this year and next but also for 2028. Given the uncertainty, I think we're not ruling out further increases not only this year, but maybe also next year. But we're also looking at the Fed, right? The Fed originally was supposed to cut the rate, but they held and maybe they will not cut until maybe after the midterm election. So that's my reading, my personal reading.
Because it's going to be harder from here on out. I see the difficulty.
But that's good news for us. As long as they don't cut, then that's good for the Philippines, right? Because as far as the governor is concerned, he just can't understand why there wouldn't be any guidance in any of the forward statements of the Fed. Kevin Warsh isn't a fan of forward guidance. How does the monetary board now navigate in a situation where you can't even figure out the dot plot?
I agree that there's a need for forward guidance. When I became governor, I know that the traditional central banker is deliberately vague, right? No forward guidance at all. But they said, 'No, no, let's be transparent and give a signal to the market, right?' So they don't speculate too much. So I agree with Governor Remolona that we need forward guidance.
So how then are you going to navigate if Kevin Warsh isn't going to give forward guidance and you're needing to also watch the interest rate differential with the Fed funds, right? So that's one of those variables that you can't control, right? But he has changed the rules. In fact, he has put a, I think he is not allowing any of the members of the Fed to talk separately from his views. So that's another rule.
Well, I'm glad you're talking and you're part of the monetary board.
But we have a silent period, right? Just before the decision. So right before and right until after his press release. So how then, all right, so that's the Fed, that's one variable, but there are a lot more variables here at home of that balancing act that you mentioned between inflation and growth.
Some of the economists I've spoken with speak about stagflation pressures, something that the governor doesn't think we're quite closer to, but what is your opinion though? I mean, we're seeing growth slow and inflation pressures are still elevated.
