The monetary board authorities confirmed that they will keep inflation within the target limits, and within the Central Bank of the Philippines on Thursday.
“We will do what is necessary to achieve a stable, targeted inflation path,” BSP Governor Philip Medala said in a recorded message during The Asian Banker’s Finance Philippines 2022 Forum.
He added that the current policy settings remain relevant despite the normalization of the policy settings.
Medela said the interest rate is still lower than it was in the past.
“If you compare the policy rate with inflation, the real rate is still negative,” he said.
The head of the Central Bank said that achieving an inflation trajectory consistent with the target is of great importance to them.
“Respectful growth is still possible under these terms, but for BSP, price stability, one of our pillars, is the main concern,” Medala said.
Medala made the comments before the monetary board had to adjust interest rates further on Thursday to support a weaker currency and mitigate its impact on imported inflation.
The Board of Directors has increased its base billing payment rate (BSP) by 175 basis points since last March due to the high rate of inflation in the local economy.
The BIS policy move comes on the heels of the US Federal Reserve’s 75 basis point interest rate hike, which was announced hours earlier that day.
US Federal Reserve Chairman Jerome Powell indicated that interest rates will continue to rise this year.
The Monetary Board has raised its key bill settlement payment (BSP) interest rates by 175 basis points since last March due to the high rate of inflation in the local economy.
The central bank has raised interest rates by 1.75 percent since May to combat rising consumer prices.
Last August, BSP also implemented a 50 basis point increase to 3.75 percent.
Medala said earlier this month that the Bills Settlement Payment (BSP) had done enough earlier this year, adding that there was no peso problem but a “dollar problem.”
In fact, central banks around the world are tightening monetary policy to curb inflation.
The Asian Development Bank earlier forecast that inflation in the Philippines will average 5.3 percent in 2022.