The central bank wants to make sure it does not unnecessarily tighten monetary policy, its governor said on Thursday.
The Philippines’ economic growth prospects remain firm and the banking system is in good shape, Governor Eli Remolona said at a business event.
In December, the central bank kept its benchmark interest rate steady at 6.5 percent for a second straight meeting after a series of tightening moves to rein in inflation, including an off-cycle hike in October.
Remolona said they continue to see the need “to keep monetary policy settings sufficiently tight to allow inflation expectations to settle more firmly within the target range.”
“The overall outlook for inflation remains largely unchanged. The latest risk-adjusted inflation forecast for 2024 has declined to 4.2 percent from 4.4 percent in the previous meeting in November. For 2025, the risk-adjusted inflation forecast is unchanged at 3.4 percent. Equally important, the BSP’s latest survey of external forecasters shows that inflation expectations have been broadly anchored, with a mean forecast that is within range for both 2024 and 2025,” Remolona said in December.
The Monetary Board also noted that previous adjustments have continued to work their way through the economy, “as can be seen from the declining path for core inflation.”
“In the coming quarters, the national government’s non-monetary interventions will remain crucial to sustain the disinflation process. Going forward, the BSP remains ready to adjust monetary policy settings as necessary, in line with its mandate to ensure price stability,” Remolona said.
Remolona explained key upside risks are associated with potential pressures emanating from higher transport charges, increased electricity rates, and higher oil prices.
Inflation eased to 4.1 percent in November, bringing the year-to-date inflation to 6.2 percent , still above the central bank’s target range of 2 percent to 4 percent for 2023.
Inflation figures for December will be released on Friday.
The next policy meeting is set for February 15.
