The Philippine central bank said it is ready to resume monetary policy tightening to forestall price pressures even as inflation cooled to a 16-month low in July.
(Bloomberg) — The Philippine central bank said it is ready to resume monetary policy tightening to forestall price pressures even as inflation cooled to a 16-month low in July.
Bangko Sentral ng Pilipinas “stands ready to adjust the monetary policy stance as necessary to prevent the further broadening of price pressures as well as emergence of additional second order effects in view of the persistent upside risks to the inflation outlook,” the central bank said in a statement Friday.
The comment followed official data that showed consumer prices rose 4.7% in July from a year earlier. That was the slowest pace since March 2022, and lower than the 4.9% median estimate. The core measure, which strips out volatile food and fuel prices, also eased to this year’s lowest at 6.7%.
The Philippine central bank, which has waged the most aggressive monetary-policy tightening campaign in Southeast Asia with 425 basis points of hikes, is signaling there’s still room for rates to rise from the current 16-year high or at least stay at that level to quell stubborn inflation.
The BSP, which has stood pat in the past two meetings, isn’t the only one to be weighed by inflation concerns. Malaysia ended an extended pause to deliver a hike in May, while Thailand increased borrowing costs for a sixth time earlier this week to ensure inflation returns to target durably.
Higher wages and lingering food supply constraints that may be further hampered by the El Nino weather, recent storms as well as higher transport costs were cited as key risks by the BSP. It retained the view that inflation will decelerate back to the within the 2%-4% target band next quarter.
Governor Eli Remolona told CNN Philippines in an interview before the July data that the country isn’t out of the woods yet on inflation and policymakers are ready to hike as soon as the Aug. 17 policy meeting, if necessary. In his interview with Bloomberg last month, the governor signaled he’s open to further tightening.
Finance Secretary Benjamin Diokno, a member of rate-deciding panel, said after the Friday print that the country is “over the hump” on inflation.
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