BSP Thoroughly Monitors the Impact of Global Developments on Inflation in the Philippines
The Banko Sentral ng Pilipinas (BSP) authorities are actively monitoring the overseas developments such as improvement in oil prices together with its impact on domestic inflation to see if there are any second-round effects.
BSP Governor Benjamin Diokno stated in a message last Friday, March 4, “the value of petroleum in the international market has recently spiked due to the ongoing conflict between Ukraine and Russia which have raised global and domestic macroeconomic uncertainty over the near term.”
Diokno noted, “Under these circumstances, BSP will continue to closely monitor the emerging risks to the outlook for inflation and remain vigilant against possible second-round effects from supply-side pressures or any shifts in the public’s inflation expectations.”
The government has already allocated a budget to assist those sectors affected by the oil price hike like public utility vehicle (PUV) drivers and operators and farmers.
Diokno mentioned that the central bank supports the non-monetary actions of the government to help reduce the impact of soaring oil prices as well as to avoid the widening of price pressures.
Diokno cited, “On the part of the BSP, it continues to have a wide arsenal of policy instruments to respond to the possible adverse impact of this external shock.”
The Philippine Statistics Authority (PSA) reported that the inflation rate last February was a flat 3%, which is within BSP’s 2.8-3.6% forecast range for the month.
Diokno expressed, “Inflation is seen to accelerate over the near term due to higher oil prices as well as the impact of positive base effects”
Furthermore, Diokno stated, “Nonetheless, the BSP’s full-year inflation forecasts continue to show that inflation would average within the 2-4% target range for 2022-2023 as government direct measures help address the supply constraints.”
In the policy meeting on Tuesday, March 24, BSP’s policy-making monetary board will review its analysis of the inflation outlook together with the updated global and domestic improvement.