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BSP Governor Benjamin Diokno
MANILA – The domestic rate of price increase exceeded the government’s target band for the second month in a row last February by 4.7 percent, but Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno maintains that this remains temporary.
In a Viber message to reporters on Friday, Diokno said the impression of inflation in the second month of this year, the fifth month of acceleration, is within the central bank’s forecast of 4.3 to 5.1 percent. for the month.
“The latest result is consistent with the BSP’s assessment of a temporary spike in inflation in the first half of 2021, reflecting the impact of weather shocks, African swine fever on food prices, rising prices world oil and effects based on, ”he said.
Average inflation to date remained at 4.5 percent, higher than the 2-4 percent target range through 2023.
Core inflation, which excludes volatile food and oil products, also rebounded to 3.5 percent from 3.4 percent the previous month, bringing the two-month average to 3.5 percent. .
Diokno said that supply-side factors continue to drive the inflation rate, but added: “The overall balance of risks for future inflation continues to tilt downward mainly due to the continued uncertainty caused by the pandemic in national economic activity. and worldwide “.
The upside risks, in turn, “could emanate from the possibility of an early launch of Covid-19 (coronavirus disease 2019) vaccines in the Philippines,” he said.
Diokno said that since supply-side factors currently drive the inflation rate, there is no need to address this using a monetary response “unless they lead to second-round effects.”
“Supply-side shocks are best addressed through non-monetary interventions that alleviate domestic supply constraints,” he said, citing that “the national government is taking direct measures to improve the availability of affected commodities.”
Diokno said that the BSP’s Monetary Policy Board (MB) “will carefully consider recent price developments that could influence the inflation outlook along with evidence of second-round effects during the monetary policy meeting on March 25. 2021 “.
“The BSP is ready to deploy its entire arsenal of instruments as needed in fulfillment of its mandate to maintain financial and price stability leading to sustainable economic growth,” he added. (PNA)
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