A monetary response is not necessary to combat supply-side-driven inflation in the Philippines, National Economic and Development Authority Secretary Arsenio Balisacan said on Wednesday.

In an interview at the sidelines of the 2023 Arangkada Forum in Pasay City, Balisacan told reporters that the prices for goods and services could be pulled higher when supply cannot meet growing demand.

"I think that the source of inflation is the supply side and not the demand side that requires a monetary policy cure," Balisacan said.

Balisacan, a non-member of the Bangko Sentral ng Pilipinas' Monetary Board, said earlier this month that additional increases in interest rates "can hurt" the economy and consumers.

He warned that further monetary hikes might have adverse effects on both consumers and manufacturers, as it could lead to higher production costs, reducing consumer demand and, consequently, negatively impacting the economy in the long run.

He added that making borrowing costs more expensive is still "unnecessary" even if the Philippine economy can still manage more interest rate hikes.

"There's really no urgency in creating another round of high-interest rates," he said in a briefing this month. "Higher interest rates will really put us too far away from our peers in the region," he added.

As the government works to remedy underspending, Balisacan expressed optimism for improved inflation data in the upcoming months and claimed that third-quarter economic growth was probably better than a year earlier.

Before its regular rate-setting meeting on 16 November, the Philippine central bank is thinking about raising its benchmark rate outside of its normal cycle on Thursday to stabilize inflation expectations.