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HEADLINE INFLATION will likely decline within the target range in the second half, Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno said on Thursday, adding that a monetary policy response would not be needed as risks arise from the supply side.
“We recognize that the factors that explain the high inflation are not due to the demand side but to the supply side: the increase in oil prices, the increase in some food prices due to some factors. So we think it doesn’t require a monetary response, ”he said in a brie.to beof.
“It would be beyond our forecast of 2-4% for the first half of the year, but we are confident that it will decrease in the second half of the year,” he added.
InFloridaThe ration soared to a two-year high of 4.2% in January due to high oil and food prices.
TO Business world survey of 16 analysts last week yielded a median estimate of 4.8% for February inFloridanear the upper end of the central bank’s estimate of 4.3% to 5.1% due to continued increases in oil and some food prices.
THEffiInflation data for February is scheduled to be released today.
The country is in a negative real interest environment with the key policy rate at 2% and January inflation at 4.2%.
The Monetary Board at its first meeting on February 11, kept the official interest rates intact. Diokno has also said they will remain accommodative, hinting that discussions about a rate hike are “too early” for now.
“Monetary policy is running late and we cannotFloridainfluence onFloridaaction in the short term. It is the direct measures that will be able to do that ”, said the senior director of the Department of Economic Research of the BSP, Zeno R. Abenoja.
He said the central bank supports the non-monetary measures that have been imposed to reduce the prices of raw materials, such as the maximum prices of pork and chicken products.
“The effective implementation of these non-monetary measures should help to anchorFloridaexpectations of action in the short term ”, said Abenoja.
The central bank waits inFloridato an average of 4% this year, much faster than 2.6% in 2019. By 2022, they expect an average ofFloridaation to facilitate 2.7%.
Diokno said they continue to monitor developments related to higher inflation to gauge their monetary actions.
“For example, if this inFloridaThe situation is followed by an increase in demand and a higher salary event, that is worrying, ”he said.
The Monetary Board will hold its rate setting meeting on March 25. Luz Wendy T. Noble
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