The Bangko Sentral ng Pilipinas (BSP) on Thursday hinted broadly of a change in monetary policy stance as headline inflation trekked north of 5.3 percent in August to 6.1 percent in September, eluding generous forecasts of moderating price pressures.
While it acknowledged the inflation outturn proved within forecast range of 5.3 percent to no more than 6.1 percent during the period, it also acknowledged the price drivers that have risked the inflation outlook over the policy horizon.
According to BSP governor Eli Remolona Jr, the BSP “stands ready to resume monetary policy tightening as necessary to prevent the renewed broadening of price pressures as well as the emergence of additional second order effects in view of the persistent upside risks to the inflation outlook.”
Remolona earlier said changes in the rates at which it borrows from or lends to banks were “not off the table” given persistent price pressures, particularly on the food and energy components of the consumer price index.
The rate-setting monetary board of the BSP will meet again to decide on this matter at its penultimate meeting scheduled in November.
“The risks to the inflation outlook remain skewed significantly to the upside for 2023 to 2025. The potential impact of new petitions for transport fare adjustments, higher domestic prices of key food items facing persistent supply constraints, higher-than-expected minimum wage adjustment in areas outside NCR, impact of El Niño weather conditions on food prices and utility rates, and higher electricity rates are the major upside risks to the inflation outlook,” Remolona said.
He noted the higher prices of oil and key agricultural commodities drove inflation still higher during the month and that inflation is expected to remain elevated in the coming months due to continued impact of supply shocks on food prices and the rise in global oil prices.
Still, Remolona continues to project inflation decelerating to within the inflation target by end-2023 in the absence of further supply shocks.
He also vowed to continue supporting the timely and effective implementation of non-monetary government measures to mitigate the impact of persistent supply-side pressures on inflation.
