NO FURTHER monetary policy adjustments are needed at this time as the economy is still on its way to recovery, Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno said ahead of Thursday’s review.
“So right now, given what we have deployed, we feel that this is sufficient for the time being. There’s no more need for additional monetary action on our part,” Mr. Diokno said in an interview with ANC on Monday.
“We’ll continue to monitor output growth, and so maybe a few more quarters of really strong growth,” he said, adding the central bank is also monitoring the recovery of the job market.
The central bank chief has said the BSP has room to keep borrowing costs low following the stronger-than-expected economic growth seen in the third quarter and that he does not see the need for rate adjustments until the end of the year.
The Monetary Board is set to review its policy settings on Thursday, which will be its second to the last meeting for the year. A BusinessWorld poll held last week saw all 20 analysts unanimously expecting the BSP to keep interest rates at record lows in order to firm up recovery.
Meanwhile, in the July to September period, Philippine gross domestic product rose by 7.1% year on year.
The BSP is among the central banks that have continued to keep policy rates low in the region. On the other hand, monetary authorities in developed countries like the United States, South Korea, Singapore, and New Zealand have already started unwinding their pandemic-driven easy policy.
Mr. Diokno said there is “no one-size-fits-all” approach in responding to elevated inflation, which most countries have seen amid the pandemic crisis.
“Each country is different. I’ve seen many crises in the past and I’m fairly comfortable with where we are now,” Mr. Diokno said, noting the country is shielded by its hefty dollar buffers and steady dollar inflows, among others.
The overall year-on-year increase in prices of widely used goods rose to its fastest pace in three months in October.
Preliminary data from the Philippine Statistics Authority showed headline inflation was at 2.5% in October, picking up from the 2.3% pace the month before.
The October inflation result marked the fastest pace in three months or since the 2.7% reading in July 2020.
Year to date, inflation settled at 2.5%, still within the BSP’s 2-4% target this year, but above the 2.3% forecast for the entire year.
Amid these dovish signals, Bank of the Philippine Islands Lead Economist Emilio S. Neri, Jr. said the BSP will likely only adjust rate settings by the middle of 2022 despite “indications of persistent rise of global inflation.”
“With elections fast approaching, first hike might be in June. No rate hikes were seen in the first five months of presidential elections previously,” Mr. Neri said in a Zoom briefing on Tuesday. — LWTN