The Bangko Sentral ng Pilipinas sees inflation for the month of April to settle within the 3.5 to 4.3 percent range.
In a statement, BSP said continued price increases for rice and meat along with higher gasoline prices and the peso depreciation are the primary sources of upward price pressures for the month.
Lower prices of fish, fruits, vegetables as well as lower electricity rates and the rollback in LPG prices, meanwhile, could offset the upside price pressures, BSP said.
“Going forward, the BSP will continue to monitor developments affecting the outlook for inflation and growth in line with its data-dependent approach to monetary policy decision-making,” BSP said.
Inflation for March was recorded at 3.7 percent, within the government’s full-year target range of between 2 and 4 percent.
Feeling a bit more hawkish than before, the Monetary Board early this month decided to retain the central bank’s key rates for the fourth consecutive time as the country’s inflation path, while it may have shifted slightly higher, remains within the government’s target range.
The Reverse Repurchase (RRP) Rate remains at 6.50 percent. The interest rates on the overnight deposit and lending facilities also remain at 6.0 percent and 7.0 percent, respectively.
Eli Remolona, BSP Governor, said the risk-adjusted inflation forecast for 2024 has risen to 4.0 percent from 3.9 percent in the previous meeting. For 2025, the risk-adjusted inflation forecast is unchanged at 3.5 percent.
“The risks to the inflation outlook continue to lean toward the upside. Possible further price pressures are linked mainly to higher transport charges, elevated food prices, higher electricity rates, and global oil prices. Potential minimum wage adjustments could also give rise to second-round effects,” Remolona said.
“My sense is that the upside risks may have become worse so that would make us somewhat more hawkish than before. So if I would say if we were relatively dovish we might reduce rates in the third quarter and that would be no more than 25 basis points but now we’re feeling a bit more hawkish than before so I would say we’re not gonna by the third quarter. We may do it down the road. We’re contemplating easing, we’re not contemplating any further tightening,” Remolona added.
“I think the data will have to be really bad for us to consider a further rate hike because we’re already tight at the moment, this tightness we think, is sufficient to bring inflation rates down,” Remolona stressed.
Remolona said the Monetary Board noted that while upside risks to inflation have raised inflation expectations, these expectations have remained broadly anchored.
Remolona added the latest demand indicators suggest that domestic growth prospects remain largely intact over the medium term, even as overall activity continues to gradually respond to tighter financial conditions.
“Given these considerations, the Monetary Board deems it appropriate to maintain the BSP’s tight monetary policy settings. The BSP also continues to support the national government’s policies and programs to address supply-side pressures on the prices of key food commodities. The BSP remains ready to adjust its monetary policy settings as necessary, in keeping with its primary mandate to safeguard price stability,” Remolona said.
