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Philippines: Monetary regulator vows stronger action
MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) is holding its rate-setting meeting as scheduled next week, vowing stronger action to curb rising inflationary expectations.
In an interview with reporters on the sidelines of the signing of the memorandum of agreement expanding the Negosyo Center financing ecosystem, BSP Governor Nestor Espenilla Jr. said the Monetary Board would no longer hold an off-cycle meeting ahead of schedule on Sept. 27.
“We will follow the regular cycle. The 27th, with strong monetary action,” he said.
The Monetary Board meets every six weeks since 2006 to decide on the stance of monetary policy for a total of eight rate-setting meetings per year. It used to meet every four weeks between 2002 and July 2006.
Early this month, Espenilla said the central bank was considering to hold an out-of-cycle policy meeting as part of the “strong immediate action” to be taken by monetary authorities due to the volatilities in the foreign exchange market as well as rising inflation.
The BSP has so far raised interest rates by 100 basis points, bringing the overnight reverse repurchase rate to four percent in its bid to curb rising inflationary pressures due to higher oil and food prices, weak peso, and the impact of the tax reform law.
Calls mounted for another 50 basis point rate hike as economists are not convinced the 100 basis point increase delivered by the Monetary Board is not enough to rein in inflationary expectations.
Inflation leapt to a fresh nine-year high of 6.4 percent in August from 5.7 percent due to higher oil and food prices, weak peso, and the impact of the implementation of Republic Act 10963 or the Tax Reform for Acceleration and Inclusion (TRAIN) Law.
Espenilla said the BSP would also discuss the impact of the recent destruction caused by super typhoon Ompong that slammed Northern Luzon over the weekend.
“It’s too early to tell the damage it caused and what the impact. Historically, typhoons cause disruptions in supply but the impact tends to be localized and transitory,” he said.
The BSP chief said the recent typhoon would not create a problem on inflation for a longer term.
“But for the main inflation problem we’re dealing with right now, several measures have already been announced, non-monetary and monetary measures, so we continue along with those,” he said.
Espenilla said the BSP also has to consider other factors such as compensating imports.
“In any case, we always update our inflation forecast in preparation for each policy review. The updated forecast is an important basis for policy decision,” he added.
Source: https://www.philstar.com/business/2018/09/18/1852329/monetary-regulator-vows-stronger-action#SWQxyE5KQrM8hQeb.99