- April 5, 2022
- Posted by: admin
- Category: Daily News
- THE PHILIPPINE central bank is ready to take preemptive action if inflation expectations are at risk of being “disanchored,” its governor said.
- “We are prepared to take preemptive action as needed if inflation expectations become at risk or disanchored,” Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno said.
- He said they continue to be patient and will consider a rate hike adjustment by 2H22. Mr. Diokno said Mar 22 consumer price index (CPI) data suggest that inflation will likely be elevated in the coming months.
- Inflation jumped to 4% in Mar 22, near the upper end of the BSP’s projected range of 3.3-4.1% for the month and still within the 2-4% target band for the year.
- “This means that the BSP must be prepared to take action to prevent price pressures from broadening and becoming more entrenched which could translate to second-round effects,” Mr. Diokno said.
- “Now, on the timing of the disengagement strategy, I think we are still on track despite the Russia-Ukraine crisis. We’re still looking at 2H22 for our normalization [of rates] strategy,” he said.
- The Monetary Board will have its next policy review on 19 May 22. Its first policy-setting meeting in 2H22 is on 23 Jun 22. Meanwhile, Mr. Diokno said they have extended another PHP300bn zero-interest loan to the National Government.
- “They recently renewed it and it will be paid by 12 Jun 22. So, by the time the new administration takes over, there will be no more advances from the central bank,” he said.
- A decision on future direct advances will be made by the next administration. This is the sixth time the BSP extended direct advances to the National Government since the pandemic.
- It is lower than the PHP540bn which was extended thrice in 2021, reflecting the gradual withdrawal of the BSP’s budgetary support to the National Government.
- Mr. Diokno also said they have significantly reduced their purchase of government securities.
- “It’s been declining significantly. Right now, we almost don’t trade anymore. There are days when we don’t buy it,” he told reporters in mixed Filipino and English.
External Link : https://www.bworldonline.com/bsp-ready-for-preemptive-action-to-tame-inflation-risks-diokno/