The series of policy interest rate adjustments by the BSP are intended to address the risks to the inflation outlook and anchor inflation expectations over the policy horizon as the economy continues to recover from the Covid-19 pandemic.
The Bangko Sentral ng Pilipinas on Friday said it would still raise the interest rates in the next two meetings to ensure inflation stays within its target range of 2 to 4 percent in 2023.
BSP governor Felipe Medalla made the statement in a Bloomberg TV interview as the country's economic managers maintained that the inflation target band for 2023 and 2024 at two to four percent and set the same range for 2025 and 2026.
"We have to do more (rate hikes) to make sure that happens," Medalla said.
In a separate statement, BSP said retaining the targets underpins the BSP's commitment to take all necessary action to bring inflation to a target-consistent path in the medium term.
"This announcement of the medium-term inflation target is in line with the BSP's commitment to transparency and accountability as well as the forward-looking approach in the conduct of monetary policy," BSP said.
The Central Bank also mentioned that the inflation target range of 3.0 percent ± 1.0 percentage point (2 to 4 percent) continues to be an "appropriate quantitative representation of the medium-term goal of price stability" optimal for the country.
Development momentum
BSP said easing mobility restrictions, more investments, and the restart of business and tourism-related activities will help the Philippine economy maintain its development momentum.
"The policy interest rate increases will also support the medium-term growth outlook as price stability promotes efficient allocation of resources and preserves the purchasing power of households," the Central Bank added.
Global oil and food prices are expected to moderate over the policy horizon, thereby easing the pressures on prices of domestic goods, BSP said.
However, domestic agricultural production continues to face challenges, particularly from weather disturbances, animal diseases, and global supply constraints. For this reason, the BSP continues to support the government's implementation of timely non-monetary measures to address supply-side price pressures.
"The series of policy interest rate adjustments by the BSP are intended to address the risks to the inflation outlook and anchor inflation expectations over the policy horizon as the economy continues its recovery from the Covid-19 pandemic," BSP said.
"Going forward, the BSP will continue (to monitor price developments closely) and implement timely monetary policy action consistent with its mandate to maintain price and financial stability, conducive to sustainable economic growth," it said.
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