BSP Governor Benjamin Diokno. (File photo)
MANILA – Near-term inflation pressures do not need monetary policy response unless it results in second-round effects, Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno said on Friday.
This, after rate of price increases rose for the fourth consecutive month to 4.2 percent last January, which surpassed the government’s 2-4 percent target band until 2024.
In a Viber message to journalists, Diokno said that while the inflation print in the first month this year surpassed even the central bank’s 3.3 to 4.1 percent projection for the month this was caused by supply-side factors, specifically the African Swine Fever (ASF), impact of weather-related disturbances of agricultural products, and oil price upticks.
These factors, he said, are, however, transitory and the situation “is consistent with the BSP’s prevailing assessment.”
“Average inflation is still seen to settle within the 2-4 percent target range over the policy horizon,” he said.
Diokno said supply-side inflation pressures “are best addressed by non-monetary interventions that ease domestic supply constraints.”
“Currently, direct measures are being pursued by the National Government to enhance the availability of affected commodities,” he said.
For one, Malacañang has ordered a price cap on select pork and chicken meat.
Diokno said these developments will be among the factors that will be considered during the first rate-setting meet for the year of the policy-making Monetary Board (MB) on February 11.
“The BSP stands ready to deploy its full arsenal of instruments as needed in fulfillment of its mandate to maintain price and financial stability conducive to sustainable economic growth,” he added. (PNA)
