The Bangko Sentral ng Pilipinas (BSP) said it is focusing on maintaining policy support to help drive economic recovery.
MANILA — Inflation is still transitory, noting inflation will return to within target in 2022 and 2023, according to BSP Governor Benjamin E. Diokno.
“The BSP, however, is confident that the Philippines is well-placed to recover with a possible tightening of global financial conditions.” Diono said.
He added that the country will also be shielded by its ample dollar reserves and external payment position that is supported by remittances, business process outsourcing earnings, and expected recovery in export revenues.
“Many central banks in advanced and emerging economies have started reassessing their respective monetary policy settings in view of surging prices owing to strong demand and persistent supply constraints,” Diokno noted.
He said the BSP can tap policy tools for such incidents, including a timely participation in the foreign exchange market to help tame volatility. Measures that target specific imbalances and prevent the buildup of risks in the financial system may also be tapped, he added.
“Inflationary pressures may continue to emanate from rising international commodity prices, the potential effects of recent weather disturbances, and a possible prolonged recovery from the African Swine Fever outbreak,” Diokno further said.
Headline inflation in September eased to 4.8 percent from 4.9 percent in August, but still above the 2-4 percent BSP target. Inflation is expected to average 4.4 percent this year.
Meanwhile, with the surge of oil prices in recent weeks, BSP Deputy Governor Francisco G. Dakila, Jr. attributed the higher oil prices to weather disruptions and the decision of major oil exporting countries to keep production levels unchanged despite a rise in global demand.
“Having more targeted intervention would be actually more effective. Assistance can be directed to the most vulnerable sectors of the economy, including on public transport,” Dakila said. (JD/Headline PH)