Too soon to declare victory over inflation, Philippine central bank chief says

Published Fri, Jul 28, 2023 · 08:27 PM

Bangko Sentral ng Pilipinas (BSP) governor Eli Remolona says that inflation looks on its way back to the official 2 per cent-4 per cent target, but too soon to declare victory. PHOTO: REUTERS

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PHILIPPINE core inflation remains high, with persistent upside risks, and it is too soon to declare victory in the battle to curb consumer price pressures, the central bank chief said on Friday (Jul 28).

Bangko Sentral ng Pilipinas (BSP) governor Eli Remolona, speaking at a bank anniversary event, said however that inflation looks on its way back to the official 2 per cent-4 per cent target.

Headline inflation in June was 5.4 per cent, easing for a fifth straight month, while core inflation was 7.4 per cent, down slightly from 7.7 per cent in May. The Philippine Statistics Authority will release July inflation data on Aug 4.

The BSP, which will convene on Aug 17 to review monetary policy, will assess additional information as it comes in, Remolona said. It has kept the benchmark interest rate steady at 6.25 per cent at its last two meetings, following a series of rate hikes totalling 425 basis points.

Some economists expect the BSP to extend the pause as the central bank has projected headline inflation to be within the target range by the last quarter of this year.

“We will analyse the data as it arrives and that analysis will decide monetary policy down the road,” Remolona said.

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Last month’s inflation rate, which was below the 5.5 per cent forecast in a Reuters poll, brought the year-to-date average to 7.2 per cent.

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Eli Remolona will take the helm from July, just as the central bank is winding down its rate-hiking campaign with the pace of price increases slowing, although inflation at more than 6% remains well outside the bank’s target of 2% to 4%.

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The BSP has done enough after 425 basis points of hikes in the past year.

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“Global markets need alternative means to price. This is the tentative solution,” Bangko Sentral ng Pilipinas assistant governor Johnny Noe Ravalo says.

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The US Federal Reserve delivered a quarter-percentage-point rate increase earlier this week, as expected, and has not ruled out raising rates further if data warranted. REUTERS

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Bangko Sentral ng Pilipinas Philippines Inflation

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