June 24, 2022

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BSP ready for preemptive action to tame inflation risks — Diokno

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Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno gives a speech at the Philippine Economic Briefing at the Philippine International Convention Center, Pasay City, April 5. — PHILIPPINE STAR/ GEREMY PINTOLO

By Luz Wendy T. Noble, Reporter

THE PHILIPPINE central bank is ready to take preemptive action if inflation expectations are at risk of being “disanchored,” its governor said on Tuesday.

“We are prepared to take preemptive action as needed if inflation expectations become at risk or disanchored,” Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno said at the Philippine Economic Briefing held in Pasay City on Tuesday.

He said they continue to be patient and will consider a rate hike adjustment by the second half of 2022.

Mr. Diokno said March consumer price index (CPI) data suggest that inflation will likely be elevated in the coming months.

Inflation jumped to 4% in March, near the upper end of the BSP’s projected range of 3.3-4.1% for the month and still within the 2-4% target band for the year.

“This means that the BSP must be prepared to take action to prevent price pressures from broadening and becoming more entrenched which could translate to second-round effects,” Mr. Diokno said.

In March, the BSP kept rates at record lows as it cited the need to keep supporting the economy at a time of increased uncertainties to the growth and inflation outlook. At the same time, it acknowledged that economic recovery has already gained traction.

The Monetary Board now expects inflation to breach the target at 4.3% for 2022 from 3.7% previously, citing the surge in oil and commodity prices due to the Russia-Ukraine war.

“Now, on the timing of the disengagement strategy, I think we are still on track despite the Russia-Ukraine crisis. We’re still looking at the second half of the year for our normalization [of rates] strategy,” he said.

Mr. Diokno said their eventual normalization of policy setting will be supported by…

Neil

2022-04-05 12:33:59

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