BSP vows to bring inflation within targets




The Manila Times

Business Times

THE Monetary Board authorities assured it would bring the inflation within target, Bangko Sentral ng Pilipinas (BSP) guaranteed on Thursday. “We will do what is necessary to achieve a target consistent inflation path,” said BSP Governor Felipe Medalla in a recorded message during The Asian Banker’s Finance Philippines 2022 forum. He added that the current policy settings remain accommodative despite the normalization of policy settings. Medalla said the policy rate is still lower than it used to be. “If you compare policy rate to inflation, the real rate is still negative,” he said. The central bank chief said that achieving a target-consistent path of inflation is of great importance to them. “Respectable growth is still possible under these terms, but for the BSP, price stability, one of our pillars, is the primary concern,” said Medalla. Medalla made these remarks before the Monetary Board had to adjust interest rates further on Thursday to support a weakening currency and blunt its effect on imported inflation. The board has increased the BSP’s key rates by 175 basis points since last March due to elevated inflation rate in the domestic economy. The BSP’s policy move follows the US Federal Reserve’s substantial rate hike of 75 basis points, which was announced hours earlier that day. US Federal Reserve Chairman Jerome Powell had indicated that interest rates would continue to rise this year. The Monetary Board has increased the BSP’s key rates by 175 basis points since last March because of the elevated inflation rate in the domestic economy. The central bank had increased rates by 1.75 percent since May to combat the surge in consumer prices. Last August, BSP also implemented a 50-basis-point hike to 3.75 percent. Medalla said earlier this month that BSP had done enough earlier this year, adding that there is no peso problem but “a dollar problem.” In fact, central banks worldwide are tightening monetary policy to curb inflation. The Asian Development Bank earlier projected that Philippine inflation would average at 5.3 percent in 2022.