BSP signals further ‘monetary action’ to curb inflation, support growth

MANILA, Philippines – The Bangko Sentral ng Pilipinas (BSP) is prepared to take “further monetary actions” to rein in lingering inflation and support slumping growth, its Deputy Governor Zeno Abenoja said on Monday, signalling the central bank is unlikely to stand pat amid global uncertainties.

At a congressional briefing, Abenoja said the BSP is vigilant amid a “challenging external environment” that has pushed up prices, adding the monetary authority is ready to act to bring inflation back to its 3 percent medium-term target.

“In the coming months, in the coming quarters, amid the challenging external environment, the BSP will remain data-dependent,” he told lawmakers, who are being briefed on the economic assumptions underpinning next year’s P7.2 trillion spending plan.

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READ: BSP to go easy on raising rates despite high inflation

The BSP had raised its policy rate by 50 basis points after price gains that started in March, when a conflict in the Middle East began disrupting global oil shipments through the Strait of Hormuz. The Philippines, a net importer of oil, relies heavily on crude from the energy-rich region.

It delivered a 25 basis point hike in April, and another quarter-point increase in June, putting the key policy rate to 4.75 percent. The central bank’s next policy meeting is set for Aug. 27.

BSP Governor Eli Remolona, Jr. said the central bank will “look at all the evidence” in deciding on the key rate, “and we are prepared to take further steps as necessary to ensure that inflation returns to target.”

“Consistent with our mandate, we worry about inflation,” BSP Governor Eli Remolona, Jr. told lawmakers. Inflation had soothed for a third consecutive month to 6.2 percent in July, from its April peak of 7.2 percent. “Inflation has eased somewhat over the last three months.”

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“However, inflation remains well above our target of 3 percent,” he added, though noting that the central bank expects price increases to “ease gradually” even as global risks remain “tilted to the upside.”

The Philippine economy grew by 2.3 percent in the second quarter of this year, from 2.8 percent in the first quarter. /mr