BSP Governor Benjamin Diokno
MANILA – Inflation slowed for the third consecutive month last April to 2.2 percent, in line with the Bangko Sentral ng Pilipinas’ (BSP) forecast of a benign inflation environment due to the coronavirus disease 2019 (Covid-19) pandemic.
Rate of price increases in the fourth month of 2020 decelerated from the previous month’s 2.5 percent, bringing the average inflation to date to 2.6 percent, at the lower half of the government’s 2 to 4-percent target band until 2022.
In a Viber message to reporters Tuesday, BSP Governor Benjamin Diokno said April’s inflation rate is within monetary authorities’ 1.9 to 2.7-percent projection for that month.
He said it is “consistent with the BSP’s prevailing assessment that inflation is expected to be benign over the policy horizon due to the adverse impact of the coronavirus pandemic on the domestic and global economy.”
Diokno said latest baseline forecasts indicate a 2-percent average inflation this year and 2.5 percent average next year.
Core inflation, which excludes volatile food and oil items also decelerated to 2.5 percent from 2.7 percent last March, resulting in a 2.8 percent average to date.
Diokno reiterated his projection for a U-shape recovery path for the Philippine economy from the pandemic.
“Growth is expected to bounce back to its potential output growth in 2021 supported by the measures under the government’s recovery plan,” he said.
Diokno said the central bank continues to “support for urgent and carefully coordinated measures with other government authorities to ease the spillover effects of the pandemic on people and firms, with a view towards preventing any long lasting economic and social damage.”
“In addition to the monetary policy actions that have been announced, the BSP stands ready to deploy any available measures in its toolkit as we continue to assess the impact of coronavirus pandemic on the domestic economy,” he added.
Among the measures that the BSP has implemented to address the economic impact of the pandemic are the total of 125-basis-point reduction in the central bank’s key policy rates, and the 200-basis-point cut in universal and commercial banks (U/KBs) and non-bank financial institutions with quasi-banking functions’ (NBQBs) reserve requirement ratio (RRR) to boost domestic liquidity.
It has also permitted financial institutions’ loans to micro, small and medium enterprises (MSMEs) as alternative compliance to RRR to lessen banks’ financial burden on loans to the sector, and has reduced the credit risk weights on current loans extended to MSMEs from 75 percent to 50 percent for qualified MSMEs and 100 percent for non-qualified MSMEs. (PNA)
